BUDAPEST: Central European equities markets mostly eased slightly on Thursday, taking a breather after the biggest swings since Britain's vote to leave the European Union last June.
Budapest's main index jumped 4 percent on Wednesday after falling sharply for days as the region's bourses were gripped by profit-taking following a rally in global equities markets driven by expectations for economic stimulus in the US
The Hungarian index shed 0.1 percent by 1012 GMT, in line with a drop in Warsaw's blue-chip index. Bucharest fell 0.3 percent and Prague gained 0.1 percent.
The stocks of Central Europe's biggest independent lender, Hungary's OTP added half a percent to Wednesday's 5 percent gain.
OTP was among shares last week, which started the downwards correction wave in the region as a target price downgrade from Citi knocked it from almost 10-year highs.
It is one of the Hungarian shares whose valuation based on price-per-earnings has become stretched and that makes the Budapest index, which has set several record-highs since November, volatile, said Jozsef Miro, analyst of Erste.
The value of banking stocks may have increased after the latest jump in short-term US yields due to strengthening expectations for Fed interest rate hikes, which could lift bank revenues and prop up lending, Miro said.
"If this indeed leads to a normalisation in the world, towards pre-2008 times, that could justify a rise in (stock) valuations," he said. "In that world, price moves in the magnitude of 5 percent were not strange at all."
Equilor Brokerage said in a note that OTP was expected to report over a 20-percent jump in its net profits on Friday.
"2016 was OTP's best year since the mortgage market crisis (in 2008-2009)," Equilor analyst Monika Kiss said, adding that investors were also watching to see if OTP lifts its dividend guidance.
The outlook of banks has improved recently across the region, partly due to the prospect of monetary policy tightening in some countries, and a more friendly government attitude in Hungary and Poland.
Bank stocks, which were key drivers of this year's equities index rises in the region, were mixed on Thursday.
In currency markets, the forint and the zloty eased 0.2 percent against the euro, giving up Wednesday's gains, and the leu firmed 0.1 percent.
Regional government bond yields retreated after a rise on Wednesday and Hungary sold slightly more bonds at its bi-weekly auction than planned.
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