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CEE MARKETS-Polish bonds firm as CPI below forecasts again

* Polish CPI, first figure for May from CEE, is below forecasts

* Low CPI underpins that central bank policy will remain loose

* Polish bonds firm, zloty steadies

(Recasts with Polish GDP and CPI data) BUDAPEST/WARSAW, May 31 (Reuters) - Poland's 10-year government bond price hit a 7-month high and the zloty steadied, after May figures from Central Europe's biggest economy showed lower than expected inflation in the second month in a row. Flash figures for May showed that Poland's annual inflation dropped to 1.9 percent from 2 percent in April, though analysts had expected a flat rate. This was the first inflation release for May in the region where consumer inflation indices often move in tandem. April's lower-than-expected figures already boosted the perceptions that most of the region's central banks will not lift interest rates any time soon despite a pick-up in economic growth. Other Polish data earlier on Wednesday confirmed that the economy expanded by 4 percent in annual terms in the first quarter. "We expect the MPC (Polish central bank) to remain relatively dovish, especially (as the) inflation rate is expected to stabilize below, but close to 2 percent in (the)coming months," Erste analyst Katarzyna Rzentarzewska said in a note after the output figures. "The key to watch will be labor market developments," she said. The zloty was steady at 4.1704 against the euro at 1225 GMT, while the forint, the Czech crown and the leu firmed 0.1-0.2 percent. "The data should underscore the ongoing goldilocks status of the Polish economy with a strong, but not hot economy amidst a stable inflation rate," said Raiffeisen analyst Stephan Imre before the figures. The yield on Poland's 10-year bonds fell 3 basis points to 3.23 percent, narrowing the gap with Hungary's corresponding yield, which rose 1 basis point to 3.04 percent. Stock prices were mostly flat or higher in the region, after profit-taking shaved the past weeks' gains earlier this week. Poland led the rise. Warsaw's bluechip stock index firmed 0.7 percent, led by an about 3 percent rise in the stocks of PKO BP, the country's biggest lender.

CEE MARKETS SNAPSH AT 1425 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.428 26.460 +0.12 2.19% 0 5 % Hungary 307.13 307.74 +0.20 0.55% forint 00 50 % Polish zloty 4.1704 4.1712 +0.02 5.60%

%

Romanian leu 4.5665 4.5711 +0.10 -0.69%

%

Croatian kuna 7.4130 7.4183 +0.07 1.92%

%

Serbian dinar 122.42 122.58 +0.13 0.76% 00 00 % Note: daily calculated previo close 1800 change from us at CET

STOCKS

Latest Previo Daily Change

us

close change in

2017

Prague 1005.1 1006.1 -0.10% +9.07 6 5 % Budapest 34396. 34321. +0.22 +7.48 11 14 % % Warsaw 2309.1 2292.2 +0.74 +18.5 7 7 % 5% Bucharest 8682.6 8688.5 -0.07% +22.5 9 0 5% Ljubljana 786.54 782.22 +0.55 +9.61 % % Zagreb 1852.6 1854.0 -0.08% -7.13% 1 8 Belgrade 725.85 719.15 +0.93 +1.18 % % Sofia 661.89 659.35 +0.39 +12.8 % 7%

BONDS

Yield Yield Spread Daily (bid) change vs change Bund in Czech spread

Republic

2-year -0.16 0.023 +055b +2bps

ps

5-year -0.155 -0.028 +028b -2bps

ps

10-year 0.686 -0.052 +039b -5bps

ps Poland

2-year 1.908 -0.036 +262b -4bps

ps

5-year 2.664 -0.047 +310b -4bps

ps

10-year 3.24 -0.041 +295b -4bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.35 0.43 0.49 0

IBOR=>

Hungary <BU 0.19 0.23 0.29 0.15

BOR=>

Poland <WI 1.75 1.764 1.795 1.73

BOR=>

Note: FRA are for ask quotes prices ********************************************************** ****

(Writing by Sandor Peto; Editing by Toby Chopra)