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Warsaw shares recover, while Bucharest hits 3-month low

Warsaw shares recover, while Bucharest hits 3-month lowPRAGUE/WARSAW: Central European stocks were mixed on Monday as strong Polish industrial output data helped Warsaw recover after a week of losses, but Bucharest’s main index fell to a three-month low on pension scheme worries.

Trading in the region was subdued due to public holidays in some countries, with markets in Germany, Austria and Hungary closed.

Central European assets suffered a sell-off last week, which spread to equity markets as the dollar strengthened in global markets.

Warsaw’s main share index rose 1.4 percent after five days of losses, supported by the data showing industrial output jumped 9.3 percent year-on-year in April.

“(The figures) are a decent opening of the second quarter. In the next two months, the readings may be weaker, but still the pace of economic growth will remain relatively high,” said Monika Kurtek, chief economist at Bank Pocztowy.

“The Monetary Policy Council, amid positive news from the economy and inflation at the bottom of the central bank’s target range, will probably continue to maintain its easing bias in monetary policy,” she said.

In Bucharest, the main share index was down for a seventh straight session, falling 1.3 percent to 8302.98 points and hitting the lowest since Feb. 23 on worries the government may cut contributions to a private pension scheme from the second half of the year.

Government officials denied they would cut contributions, adding to previous denials by the leader of the ruling Social Democrat Party. However, the cabinet has gone back and forth on its plans to reduce contributions or dismantle the private part of the pension scheme.

“Despite official denials, the plan to freeze contributions is clearly a negative for stocks,” said a broker in Bucharest. “The proposal has been floating around unofficially since earlier in the year.”

Copyright Reuters, 2018

Source: Brecorder

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