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CEE MARKETS-Leu stable as ruling party expected to propose new PM by Monday

BUDAPEST, June 22 (Reuters) - The Romanian leu held steady on Thursday despite the political uncertainty over who will succeed ousted Prime Minister Sorin Grindeanu. Grindeanu fell in a no-confidence vote initiated by his own party, which is controlled by political adversary Liviu Dragnea. Dragnea is expected to come up with a new candidate by Monday, when President Klaus Iohannis considers his choice. Centrist President Klaus Iohannis has said he will only approve a candidate who has a clean criminal record - something that prevents Dragnea, who has a conviction for vote rigging, from taking the top job himself. "The leu will probably stick to this area of under 4.6 for a while until markets see what is going on with the new government," said one trader with a foreign bank in Bucharest. "But I don't think there are reasons for it to appreciate. There is instability, unpredictability and (hasty) policies." Iohannis rejected Dragnea's candidate for prime minister in December after his party won an election by a wide margin.

"It can only be hoped that Dragnea will choose his candidate wisely. Otherwise President Iohannis will once again be unable to agree and a deepening of the crisis will be inevitable. Against this background (the leu) will remain under depreciation pressure against the euro," analysts at Commerzbank said in a note. All other currencies also moved in tight ranges on Thursday. In the Czech Republic, the crown could continue to appreciate, albeit slower, despite a fresh message from several rate-setters, including central bank Governor Jiri Rusnok, that rate hikes may come later than expected. A strengthening Czech crown may lead to a slower rise of interest rates, possibly pushing a move beyond the third quarter projected in the central bank's latest economic outlook, Rusnok was quoted as saying on Wednesday. "We view the change of guidance as the result of declining inflation momentum around the region, and declining probability of the ECB hiking rates anytime soon," Commerzbank said. "But such a change of guidance is likely to slow down the pace of CZK appreciation from here - we forecast EUR-CZK to stay stable at around 26.00 through end-2017." Stocks around the region fell moderately except in Budapest where majors OTP Bank and Richter fueled mild gains. French President Emmanuel Macron on Wednesday singled out Hungary and Poland when he said EU states that spend the bloc's finances but turn their backs on its principles should feel "the full political consequences." Macron will meet leaders of the Visegrad Four nations of Poland, Hungary, Slovakia and the Czech Republic at a summit of the European Council on Thursday and Friday.

CEE MARKETS SNAPSHO AT 0947 CET

T CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.3000 26.286 -0.05% 2.69%

0

Hungary 309.660 309.44 -0.07% -0.27% forint 0 00 Polish zloty 4.2555 4.2539 -0.04% 3.49% Romanian leu 4.5930 4.5974 +0.10 -1.26%

%

Croatian 7.4150 7.4175 +0.03 1.89% kuna % Serbian 121.660 121.74 +0.07 1.39% dinar 0 00 % Note: daily calculated previou close 1800 change from s at CET

STOCKS

Latest Previo Daily Change

us

close change in

2017

Prague 992.40 994.97 -0.26% +7.68

%

Budapest 36030.9 35945. +0.24 +12.5 6 23 % 9% Warsaw 2304.31 2319.1 -0.64% +18.3 3 0% Bucharest 8344.29 8374.5 -0.36% +17.7 1 7% Ljubljana 793.77 788.96 +0.61 +10.6 % 2% Zagreb 1856.47 1856.0 +0.02 -6.94% 3 % Belgrade 702.58 704.04 -0.21% -2.06% Sofia 684.73 686.25 -0.22% +16.7

6% BONDS

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

Republic

2-year 0.049 0.024 +069b +4bps

ps

5-year 0.024 0.044 +040b +5bps

ps

10-year 0.949 0 +070b +2bps

ps Poland

2-year 1.936 -0.053 +257b -4bps

ps

5-year 2.608 -0.011 +299b +0bps

ps

10-year 3.186 0.006 +294b +2bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.34 0.41 0.5 0

IBOR=>

Hungary <BU 0.19 0.2 0.23 0.15

BOR=>

Poland <WI 1.76 1.78 1.81 1.73

BOR=>

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

(Reporting by Reuters bureaus; Editing by Alison Williams)