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BUX down amid global gloom on GDP, OTP

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The Budapest Stock Exchangeʼs main BUX index finished down 0.67% at 22,393.98 Friday after rising 0.16% Thursday. It is up 34.63% from year-end, after losing 10.40% last year.

The Budapest main index fell, paring losses in final settlements, from a more than three-month high in the preceding session on global gloom in growing certainty of a US rate hike next month, dismal third quarter Hungarian GDP data and a surprise loss of OTP Bank.

Hungaryʼs annual GDP growth slowed to 2.3%, lagging market consensus for 2.5%, from 2.7% in the second quarter and 3.5% in the first quarter. Growth was pulled back by agriculture, industry and construction, analysts say. Meanwhile, annual GDP growth in the euro zone accelerated a little. Regional data also showed growth accelerating to well above 3%, surprising on the upside. Hungary has gone from being the regionʼs fastest growing economy last year to the slowest in the third quarter, Capital Economics said in a note.

In quarterly comparison, Hungaryʼs growth remained steady at 0.5% for the third consecutive quarter, after 0.7% in Q4 2014.

A state secretary at the National Economy Ministry confirmed Hungary was committed to cut the special bank levy for "every bank" as legislated in the summer, and thus carry out in full an agreement signed with the European Bank of Reconstruction and Development (EBRD)and Erste Group in February.

"The agreement applies to each bank and we want to stick to the agreement. This is the firm intention of not just the ministry. The agreement was signed by the prime minister and both himself and the entire Hungarian government are intent on sticking to this agreement," Economy Ministry State Secretary Agnes Hornung told Reuters.

In the past weeks, some members of government and leaders of the National Bank of Hungary (NBH) suggested the bank levy cut should be made conditional on more lending by banks, triggering a warning from Erste that it might pull out of the February agreement which also foresees the sale of 15-15% of its Hungarian unit to EBRD and the Hungarian government.

However, the soothing words from the government did not help OTP Bank this time around. It fell, following third quarter results in the morning that came in with a loss on costs related to forex household mortgage loan conversions into local currency in Hungary, Croatia and Romania. Previously, market consensus was for a positive bottom line just halved from a year ago.

In an interview with MTI on Friday, oil company MOL chairman-CEO Zsolt Hernadi projected more development and market-conform diversification with more value added in the firmʼs lucrative downstream business.

"You cannot talk about MOL buying the Croatian (INA) oil companyʼs state-owned stake, in part or in whole, before the Croatian government creates an investor-friendly environment and strives for co-operation with foreign companies investing in the country, as well as with INA," Mr Hernadi also said.

On the other hand, there had been several suitors for MOLʼs INA stake as recently as the spring of 2015, but he there had been "no steps forward that could be communicated," he added.

MOLʼs share turned into black in final trades after languishing in light losses throughout the day.

OTP lost 1.76% to HUF 5,592 on turnover of HUF 5.66 bln from a preliminary HUF 8.24 bln session total, nearly a tenth short of the daily average this year.

MOL rose 0.52% to HUF 13,500 on turnover of HUF 885 mln.

Magyar Telekom fell 0.75% to HUF 395 on turnover of HUF 105 mln.

Richter retreated 0.60% to HUF 5,000 on turnover of HUF 1.56 bln.

The bourseʼs mid-cap BUMIX went out 0.15% lower at 1,612.19.

Over the week, the BUX improved 0.49% after soaring 3.38% in the previous week.

OTP dropped 1.17% after gathering 3.34% last week.

MOL improved 0.37% after garnering 5.28% in the preceding week.

Magyar Telekom was up 0.51% after crawling up 0.26% last week.

Richter rose 2.56% after pocketing 3.37% over the previous week.

The BUMIX ended the week 0.69% higher after rising 0.44% over last week.

Elsewhere in the region, WIG 20 in Warsaw was down 1.74%, while Pragueʼs PX added 0.27%.

Western Europeʼs major indices were all down ahead of their close on Friday, FTSE100 in London 1.18%, DAX30 in Frankfurt 1.08%, and CAC40 in Paris 1.40%.

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