CEE MARKETS 3-Serbia's dinar rises after rate hike

(Adds detail on Serbia, region, updated prices)

* Serbia's c.bank raises benchmark rate 25 bps to 10.75 pct

* Euro zone keeps pressure on CEE currencies, stocks

* Uncertainty over Hungary's IMF talks, but auction strong

By Krisztina Than and Sam Cage

BUDAPEST/BUCHAREST, Oct 9 (Reuters) - Emerging Europeancurrencies and stocks were a touch lower on Tuesday after theIMF cut forecasts for global economic growth, but Serbia's dinarbucked the trend after an interest rate hike.

The IMF said the global economic slowdown was worsening andexpects growth in central and eastern Europe to more than halveto 2.0 percent this year, and rise to only 2.6 percent in 2013.

Its warning about the growth outlook and concerns overSpanish and Greek debt knocked shares and the euro, also pullingdown closely-linked assets in central Europe.

Cash-strapped Serbia is under pressure to bring down itsdebt to reassure investors and repair damaged relations with theInternational Monetary Fund, as the economy is shrinking on theback of falling demand from its biggest trade partner, the eurozone.

The central bank increased its benchmark interest rate

by 25 basis points to 10.75 percent, surprisingsome in the market who had expected rates to stay on hold, andthe dinar

rose 0.1 percent to 114.57 per euro by 1317GMT.

Of 10 analysts and traders polled by Reuters, five hadexpected the rate to remain on hold, three saw an increase of 25basis points and two a 50 basis point rise.

"The (rate) rise was minimal," said a dealer with aBelgrade-based commercial bank. "It firmed the dinar a bit, butnothing dramatic."

Neighbouring Hungary, where markets are pricing in furthermonetary easing to help the recession-hit economy after two ratecuts in the past two months, sold 60 billion forints ($275million) worth of three-month bills at an auction, whichreceived strong bids.

Hungary's government launched a media campaign on Tuesdaysaying it would not " g ive in to the IMF" , j ust weeks beforeBudapest hopes to resume talks with lenders on a financialsafety net to bolster its shrinking economy.

A fixed income trader said that remarks by Prime MinisterViktor Orban that Hungary could make do without an IMF deal evenin 2013, had no market impact.

"The session is relatively quiet, liquidity is low butbuyers have been in a majority over the past days, especiallyaround the middle of the (yield) curve," the trader said.


Uncertainty over IMF talks, as well as euro zone concernshave weighed on the forint

this week, with the unitbid 0.1 percent lower while the Polish zlotywas down0.2 percent.

Polish yields were broadly flat, with five-year yields closeto all-time lows hit at the beginning of October.

"There will be rate cuts so yields must fall," said PawelBialczynski, a fixed income dealer at BRE Bank. "We are before acycle of cuts and it is natural that short- and medium-termyields are so low."

But dealers said that developments on the euro zone's debtcrisis were the main driver of sentiment across the region.Central European stocks were also broadly lower, led by a 0.4percent fall on the Bucharest bourse

.The Czech crownslipped 0.2 percent and Romania'sleuwas flat.

"The euro zone ministerial meeting has not brought anythingnew and Europe is in a vicious circle of negotiations," saidRoman Fol, an FX dealer at Raiffeisenbank.

--------------------------MARKET SNAPSHOT--------------------

Currency Latest Previous Local Localclose currency currencychange changetoday in 2012Czech crown

24.971 24.929 -0.17% +2.3%

Polish zloty

4.074 4.066 -0.2% +9.59%

Hungarian forint

283.34 283.2 -0.05% +11.03%

Croatian kuna

7.485 7.459 -0.35% +0.41%

Romanian leu

4.569 4.567 -0.04% -5.43%

Serbian dinar

114.57 114.71 +0.12% -6.65%

Yield SpreadsCzech treasury bonds2-yr T-bond CZ2YT=RR +3 basis points to 47bps over bmk*7-yr T-bond CZ6YT=RR -1 basis points to +75bps over bmk*10-yr T-bond CZ10YT=RR -4 basis points to +86bps over bmk*Polish treasury bonds2-yr T-bond PL2YT=RR -2 basis points to +395bps over bmk*5-yr T-bond PL5YT=RR -1 basis points to +362bps over bmk*10-yr T-bond PL10YT=RR -2 basis points to +315bps over bmk*Hungarian treasury bonds3-yr T-bond HU3YT=RR -1 basis points to +640bps over bmk*5-yr T-bond HU5YT=RR +1 basis points to +612bps over bmk*

10-yr T-bond HU10YT=RR +2 basis points to +569bps over bmk*

*Benchmark is German bond equivalent.

All data taken from Reuters at 1517 CET.

Currency percent change calculated from the daily domestic

close at 1600 GMT.

((sam.cage@thomsonreuters.com)(+40)(0)(21 305 5266)(ReutersMessaging: sam.cage.thomsonreuters.com@reuters.net))