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CEE MARKETS-Polish bonds firm, central bank discourages rate hike bets

* Polish bonds firm, central bank signals delay in rate hikes

* Analysts see later Hungarian rate hike in poll

* Polish central bank says economy balanced, core CPI moderate

(Recasts with Polish central bank comments, poll on Hungarian central bank interest rates) BUDAPEST, May 17 (Reuters) - Polish government bond prices rose on Wednesday after the country's central bank indicated that it may not start to lift interest rates next year as analysts had predicted. Tuesday's economic output figures from Central Europe had triggered expectations that the central bank may strike a less dovish tone at the policy meeting that ended on Wednesday. But the bank kept rates on hold as expected and governor Adam Glapinski said it might not need to hike rates until the end of 2018. He said the economy was balanced, core inflation remained low and the zloty was at the right levels. Analysts had been forecasting a hike in the second quarter of next year. Polish government bonds extended the gains which they posted after the finance ministry said on Tuesday that it would offer a smaller amount than usual at its bond auction on Thursday.

Ten-year bond yields fell 9 basis points from Tuesday's peak. The zloty firmed 0.1 percent against the euro to 4.186 by 1501, near 21-month highs, while the Romanian leu touched an eight-week low. With worries over a U.S. political turmoil curbing risk appetite, Central European currencies and stocks mostly faltered after a rally following France's presidential election, in which a centrist candidate saw off a far-right, eurosceptic rival. Government bond auctions in Prague and Belgrade drew sluggish demand as the Czechs offered illiquid papers and investors in Serbia wanted higher yields. Hungarian government bonds were treading water after a rally, mainly in longer-dated bonds, helped by a decline in U.S. debt yields and upbeat domestic and regional economic output data. Hungary's central bank is also expected to keep interest rates on hold at its meeting on Tuesday, and analysts expect it to add liquidity to domestic markets by further lowering its cap on its 3-month deposit facility. Analysts in a May 15-17 Reuters poll forecast that the bank's record-low 0.9 percent base rate could remain unchanged at least until the end of next year. In a poll a month ago, analyst projected a rise in the rate to 1.05 percent by the end of 2018. Since then the region's states have released April figures which have showed a retreat in inflation after a fast rise since mid-2016.

CEE SNAPS AT 1701 MARKETS HOT CET

CURRENCIES Lates Previ Daily Chang

t ous e bid close chang in e 2017 Czech 26.43 26.43 -0.02 2.16% crown 50 10 % Hungary 308.9 309.8 +0.2 -0.03 forint 100 150 9% % Polish 4.185 4.190 +0.1 5.22% zloty 5 7 2% Romanian 4.565 4.550 -0.32 -0.66 leu 0 2 % % Croatian 7.433 7.431 -0.02 1.64% kuna 0 5 % Serbian 123.0 123.1 +0.0 0.26% dinar 300 050 6% Note: calculate previ close 1800 daily d from ous at CET

change STOCK S Lates Previ Daily Chang

t ous e

close chang in

e 2017 Prague 1020. 1027. -0.63 +10. 64 12 % 75% Budapest 34173 34078 +0.2 +6.7 .12 .47 8% 8% Warsaw 2302. 2340. -1.63 +18. 21 34 % 19% Bucharest 8456. 8454. +0.0 +19. 61 74 2% 36% Ljubljana 783.6 780.2 +0.4 +9.2 4 4 4% 0% Zagreb 1865. 1863. +0.1 -6.51 07 22 0% % Belgrade <.BELEX15 732.8 730.8 +0.2 +2.1 > 3 9 7% 6% Sofia 661.9 660.8 +0.1 +12. 7 7 7% 88%

BONDS Yield Yield Sprea Daily d

(bid) chang vs chang e Bund e in Czech sprea Republic d 2-year <CZ2YT=RR 0 0.184 +068 +20b > bps ps 5-year <CZ5YT=RR 0.012 -0.00 +037 +5bp > 5 bps s 10-year <CZ10YT=R 0.835 0.016 +046 +6bp R> bps s

Poland

2-year <PL2YT=RR 1.968 0.003 +265 +2bp > bps s 5-year <PL5YT=RR 2.765 -0.03 +312 +2bp > 3 bps s 10-year <PL10YT=R 3.332 -0.01 +295 +3bp R> 5 bps s FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

inter bank

Czech Rep < 0.37 0.45 0.54 0

PRIBOR=>

Hungary < 0.2 0.24 0.33 0.16

BUBOR=>

Poland < 1.77 1.78 1.83 1.73

WIBOR=>

Note: FRA are for quotes ask

prices

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(Additional reporting by Aleksandar Vasovic in Belgrade/Jason Hovet in Prague/Agnieszka Barteczko and Marcin Goclowski in Warsaw; Editing by Catherine Evans)