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CEE MARKETS-PMIs underpin currencies, Romania seen keeping rates on hold

* June PMI indices confirm economic growth, help currencies

* Czech crown strongest since its cap was removed in April

* Romanian, Polish central banks seen holding rates

BUDAPEST/PRAGUE, July 3 (Reuters) - Central European currencies mostly firmed on Monday as June manufacturing data showed continuing economic growth in the region. Czech, Hungarian and Polish purchasing managers' indices were well above the 50 mark separating growth from contraction, though the figures from Prague and Warsaw were a bit lower than expected. "As long as the industry of Germany remains strong, our region will not have any problem either," said Peter Virovacz, analyst of ING in Budapest. Analysts said growth in the European Union, which Central Europe outperforms, could continue to underpin most regional currencies. The leu firmed slightly with investors expecting Romania's central bank, meeting on Monday, to keep record low interest rates on hold. The only monetary authority in the region that has signaled that monetary tightening may be near after many years of loose policy, is the Czech central bank (CNB). The Czech crown, trading at 26.089 against the euro, touched its strongest level since the CNB three months ago removed a cap that had kept the currency weaker than 27 for three and a half years. The crown retreated to 26.109 by 0834 GMT. It could continue to strengthen to 26 or even beyond, boosted by investors who sold tens of billions of euros to the CNB before the exit from the cap, betting on a crown surge, one Prague-based dealer said. "It has been continuous march towards 26, the question is, where the long-term short-betters have their target value," the dealer said. "We have two kinds of shorts now, the long-term ones, where the level is not known - there are massive volumes there - and the short-term ones, where the target level is 26," the dealer added. The forint touched two-week highs against the euro and traded at 308.77 at 0834 GMT. The Polish zloty eased a shade to 4.2335, but remained up from Friday's lows. The Polish central bank is expected to keep rates on hold on Wednesday, raise its economic growth forecasts and cut its inflation projections, Erste analyst said in a note. Despite Romania's robust economic growth, the leu may remain under pressure due to worries over the budget and market impact of tax policies under new Prime Minister Mihai Tudose. The government plans to ditch a flat 16 percent tax on income and profit. The plans knocked down Bucharest's main stock index to four-month lows last week. The index regained some ground on Monday, rising 0.6 percent.

CEE MARKETS SNAPSH AT 1034 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.109 26.148 +0.15 3.44% 0 0 % Hungary 308.77 309.06 +0.09 0.02% forint 00 00 % Polish zloty 4.2335 4.2298 -0.09% 4.03% Romanian leu 4.5530 4.5584 +0.12 -0.40%

%

Croatian kuna 7.4080 7.4113 +0.04 1.99%

%

Serbian dinar 120.45 120.35 -0.08% 2.41% 00 00 Note: daily calculated previo close 1800 change from us at CET

STOCKS

Latest Previo Daily Change

us

close change in

2017

Prague 978.74 980.41 -0.17% +6.20

%

Budapest 34956. 35205. -0.71% +9.23 78 42 % Warsaw 2305.8 2299.8 +0.26 +18.3 6 0 % 8% Bucharest 7902.3 7855.3 +0.60 +11.5 3 6 % 4% Ljubljana 788.82 796.40 -0.95% +9.93

%

Zagreb 1861.4 1865.5 -0.22% -6.68% 9 7 Belgrade 712.27 711.32 +0.13 -0.71%

%

Sofia 703.48 703.46 +0.00 +19.9 % 6%

BONDS

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

Republic

2-year 0.089 0.089 +067b +10bp ps s 5-year 0.106 0.081 +034b +9bps

ps

10-year 0.989 0.023 +053b +3bps

ps Poland

2-year 1.896 -0.012 +248b +0bps

ps

5-year 2.625 -0.011 +286b +0bps

ps

10-year 3.299 -0.026 +284b -2bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.39 0.5 0.6 0

IBOR=>

Hungary <BU 0.2 0.23 0.29 0.15

BOR=>

Poland <WI 1.75 1.773 1.824 1.73

BOR=>

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

(Additional reporting by Bartosz Chmielewski in Warsaw; editing