BUX pares gains after strong week

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The Budapest Stock Exchange's main BUX index finished down 0.16% at 18,083.82 Friday, after rising 2.08% Thursday to a near five-month high. It is up 8.72% from year-end, after losing 10.40% last year.

The Budapest parquet spent the day taking some profits from the week's surge. Ukrainian peace hopes still supported but investors cautiously waited to see how a ceasefire agreed on Thursday holds after it is supposed to come into force in the neighbouring country on Sunday.

Out on Friday, Hungarian Q4 GDP data showing accelerating growth instead of a widely expected slowdown apparently did not move the market, as investors and analysts alike tended to scrutinise the preliminary figures with some doubt in light of weakening year-end industrial, construction and core inflation figures published earlier.

Forecasters mostly stuck to their bleak views concerning this year.

MKB Bank said they might need to revise their 1.9% GDP growth call for Hungary this year after 4Q GDP growth came in at 3.4% on the year versus MKB's 2.6% call. But its forecasters still expect a slowdown in investment and construction this year due to a lower ability for Hungary to use up EU funds also because of an anticipated slowdown in car manufacturing. However, consumption may pickup this year on rising disposable income in the wake of the conversion of forex mortgages into forint debt and also on lower fuel prices.

Erste Bank expects Hungary's economic growth to slow significantly in 2015, to 2.1%, even lower than seen by the European Commission in its Winter Forecast, from a jump of 3.5% in 2014 as construction and manufacturing were already slowing late last year and this trend should endure. Erste expects Hungary's GDP to be further hit by eurozone weakness, and forecasts Hungarian rate cuts, and other monetary easing steps, to offset its effect.

Investors also watched warily from the sidelines how the first salvo was fired against the ruling Fidesz party by the flagship weekly newspaper within the media empire of business magnate Lajos Simicska, a long-time friend and ally-turned-foe of the prime minister on account of the government's recent policies, including the advertisement revenue tax. "The lack of strategy allowed tactical considerations to dominate, and common cause was replaced by seeking personal benefit... An unpredictable tectonic shift, an elemental reorganisation has started on the right wing," said the editorial of the weekly, Heti Valasz, published on Thursday.

The public row has come as popularity for Fidesz party appears to be in sharp decline, and as the government tries to fend off criticism from Western allies over Hungary's perceived drift towards more authoritarian rule and its pursuit of closer ties with Russia, Reuters correspondents wrote in a dispatch from Budapest.

OTP lost 0.93% from a near five-month high on Thursday to HUF 4,370, on turnover of HUF 4.77 from a HUF 6.44 bln session total, more than a quarter short of the daily average this year.

MOL ended flat at 11,900 on turnover of HUF 692 mln.

Magyar Telekom also ended flat at HUF 372 on turnover of HUF 194 mln.

Richter advanced 0.45% to HUF 3,822 on turnover of HUF 686 mln.

The bourse's mid-cap BUMIX went out 0.55% higher at 1,499.22.

Over the week, the BUX surged another 4.29% after rising 4.89% in the previous week.

OTP was up 11.48% after soaring 7.40% last week.

MOL rose 1.45% after gaining 6.11% the previous week.

Magyar Telekom increased 2.20% after an improvement of 1.96% last week.

Richter eased 0.08 % after a plus of 2.27% over the previous week.

The BUMIX was up 2.16% after rising 3.15% last week.

Elsewhere in the region, the WIG 20 in Warsaw was up 0.37%, while Prague's PX added 1.30%. Western Europe's major indices were all up ahead of their close Friday, FTSE-100 in London 0.69%, DAX30 in Frankfurt 0.43%, and CAC40 in Paris 0.68%.

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