Erste Group Bank AG jumped to its highest in 16 months, leading the biggest rally for Czech shares since September, as Hungary signaled it may ease taxes on lenders and amid signs of progress in the U.S. budget talks.
Austria’s Erste soared 4.5 percent to 611 koruna in Prague, the strongest closing price since August 2011. The PX equity index, where Erste has a 28 percent weighting, climbed 1.9 percent, the most in a day since Sept. 14.
Banks were among the biggest gainers in Europe today amid optimism that U.S. lawmakers will reach an agreement on the budget to avert more than $600 billion in automatic spending cuts and tax increases. Hungary, one of Erste’s markets, may allow lenders to lower their bank tax payment in exchange for stepping up lending, Gyula Pleschinger, state secretary at the Economy Ministry, told Portfolio news website today.
“Erste gains are linked with the improved chances for an agreement on how to avoid the U.S. fiscal cliff and with signals that the Hungarian government’s position on banks may be changing,” Marek Hatlapatka, an analyst at Cyrrus brokerage in Brno, Czech Republic, said in e-mailed comments. “Erste shares are traditionally sensitive to this type of news.”
In Vienna, its home exchange, Erste jumped 5 percent to 24.385 euros. The stock has gained 80 percent since the end of 2011 and headed for its biggest yearly rally on record.
The rally lifted the stock’s 14-day relative strength index to 80, above the 70 level that suggests in technical analysis the asset may be overbought and poised for a decline. The RSI for the PX index increased to 71.