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CEE MARKETS-Stocks slide on coronavirus worries, forint nears record lows

By Anita Komuves BUDAPEST, Feb 26 (Reuters) - Central European stock markets and currencies extended losses on Wednesday as deepening worries about the new coronavirus put pressure on global markets. The main stock indexes in Prague and Bucharest led losses, with both down more than 2% by 0955 GMT. Budapest lost 1.7% and Warsaw was down 1%. Currencies also weakened, with the Hungarian forint losing 0.3% and trading at 339.55, nearing the record low of 340.40 which it hit earlier this month. The Czech crown was down 0.3% at 25.315 to the euro, the weakest since Jan. 6. The zloty lost 0.14% against the euro and the Romanian leu was stable at 4.8105 to the euro. News about the coronavirus and the plunge in stock markets is the reason why currencies are weakening, dealers in Budapest said. "Markets have started to beat all regional currencies, the Hungarian forint is not an outlier. However, its downward trajectory is steep," one dealer said. "The changes in the tone of the central bank's comments yesterday should have had a positive effect on the strength of the forint, but in this situation it did not." The NBH left interest rates unchanged on Tuesday, as expected, and pledged to use all its tools to reach its inflation target if a lasting change in the outlook warrants policy action. The jump in headline inflation in January to 4.7% year-on-year and a plunge in the forint to record lows versus the euro led the NBH earlier this month to signal that it would use all available tools if needed to fight high inflation. "The bank only said what it has already communicated, and pushed the decision to next month. This might have pushed the forint lower a bit, but it was not significant," another Budapest-based dealer said. He added that coronavirus worries could push the forint to its record low of 340 forints to the euro again. It is still uncertain how concerns that there could be a global pandemic will affect bond yields in central Europe. Though news about the coronavirus has not moved bond yields in Hungary, they are reacting to local news, two dealers in Budapest said. "Investors are cautious, waiting to see if interbank rates move a little higher following the NBH's comments on Tuesday that suggested that there might be a rate hike in March," a fixed income dealer said. "Money might be fleeing stock markets now, which will push bond yields down," another dealer said. The Czech government is holding bond auctions later on Wednesday. "Given current circumstances in financial markets and prevailing flight to havens mood amid investors we expect solid demand today," Frantisek Kanka of Komercni Banka in Prague said in a note. Romania's longer-term government bonds fell sharply on Tuesday, a day after the country's top court overturned the re-nomination of ousted Liberal Party leader Ludovic Orban as prime minister by President Klaus Iohannis. The move looks set to prolong the country's political turmoil. Earlier this month, lawmakers toppled Orban's three-month-old minority government after a confidence vote by the Social Democrats (PSD) opposition. CEE SNAPSHOT AT MARKETS 1055 CET CURRENCIE S Latest Previous Daily Change bid close change in 2020 Czech 25.3150 25.2400 -0.30% +0.46% crown Hungary 339.5500 338.5000 -0.31% -2.48% forint Polish 4.3074 4.3012 -0.14% -1.18% zloty Romanian 4.8105 4.8092 -0.03% -0.46% leu Croatian 7.4600 7.4540 -0.08% -0.20% kuna Serbian 117.5100 117.5500 +0.03% +0.05% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2020 Prague 1016.85 1041.440 -2.36% -8.85% 0 Budapest 42330.72 43075.07 -1.73% -8.14% Warsaw 1925.55 1945.71 -1.04% -10.44% Bucharest 9564.19 9779.14 -2.20% -4.14% Ljubljana 903.99 921.04 -1.85% -2.36% Zagreb 1893.46 1896.02 -0.14% -6.14% Belgrade <.BELEX15 811.15 809.42 +0.21% +1.18% > Sofia 541.86 545.01 -0.58% -4.63% Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=RR 1.7810 0.0530 +249bps +8bps > 5-year <CZ5YT=RR 1.5110 -0.0340 +222bps -1bps > 10-year <CZ10YT=R 1.4150 -0.0050 +193bps +0bps R> Poland 2-year <PL2YT=RR 1.4930 0.0030 +221bps +3bps > 5-year <PL5YT=RR 1.6320 0.0000 +234bps +2bps > 10-year <PL10YT=R 1.8750 -0.0240 +239bps -2bps R> FORWARD 3x6 6x9 9x12 3M interban k Czech Rep < 2.37 2.28 2.15 2.39 PRIBOR=> Hungary < 0.75 0.88 0.97 0.60 BUBOR=> Poland < 1.71 1.66 1.60 1.71 WIBOR=> Note: FRA are for ask prices quotes *************************************************** *********** (Additional reporting by Robert Muller in Prague, Editing by Timothy Heritage)