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CEE MARKETS-Zloty falls half a percent as political turmoil weighs

BUDAPEST, July 21 (Reuters) - The zloty fell half a percent on Friday, underperforming the region's other currencies as Poland's standoff with the European Union over a judicial reform bill and anti-government protests at home weighed on local markets. Poland's senate was expected to back new powers to enable politicians to appoint supreme court judges, defying the protesters massed in the streets overnight to decry what they see as a move towards authoritarian rule. Mateusz Sutowicz, an analyst at Warsaw-based Bank Millennium, said the zloty's weakening was partly due to the political turmoil but also due to the strong euro. "The weakening of the zloty is a result of the strong euro after comments from (ECB chief) Mario Draghi, a technical correction... and partially a result of the current domestic political situation," he said. At 0812 GMT, the zloty was trading half a percent lower, while the Hungarian forint, which hit an 8-month highs versus the euro on Thursday, was down 0.1 percent. The Czech crown was also down 0.1 percent. The forint had led east European currencies higher on Thursday after the European Central Bank left its ultra easy monetary policy stance unchanged. The ECB's monetary stimulus has boosted Central Europe's emerging assets in recent years. Investors in this part of the world focus on the policy of the ECB but also watch the Fed and U.S. long-term debt yields. "Yesterday's ECB policy meeting was somewhat neutral for domestic markets, despite the possibility of tapering likely to surface again come autumn," ING said in a note. "That said, in our view, ECB President Mario Draghi still sounded cautious enough to avoid weighing on emerging market currencies, particularly CEE FX. This creates a supportive backdrop for regional currencies in the upcoming period." Healthy economic growth and stability have underpinned the region's currencies even though the region's central banks are unlikely to lift interest rates this year, except for Czechs. Stock markets were mostly in positive territory on Friday. Shares of Unipetrol on the Prague bourse hit their highest since February 2008 after strong second-quarter results, and were up 1.6 percent.

CEE SNAPSHOT AT MARKETS 1100 CET

CURRENCIES

Latest Previous Daily Change bid close change in 2017 Czech crown <EURCZK= 26.0930 26.0710 -0.08% 3.50% > Hungary forint <EURHUF= 305.5700 305.1900 -0.12% 1.06% > Polish zloty <EURPLN= 4.2309 4.2104 -0.49% 4.09% > Romanian leu <EURRON= 4.5740 4.5683 -0.12% -0.85% > Croatian kuna <EURHRK= 7.4110 7.4085 -0.03% 1.94% > Serbian dinar <EURRSD= 120.3800 120.5400 +0.13% 2.47% > Note: daily calculat previous close at 1800 CET change ed from

STOCKS

Latest Previous Daily Change close change in 2017 Prague 1005.15 1008.69 -0.35% +9.06% Budapest 35511.57 35424.34 +0.25% +10.96% Warsaw 2365.59 2358.50 +0.30% +21.44% Bucharest 8392.89 8369.11 +0.28% +18.46% Ljubljana <.SBITOP 807.33 799.23 +1.01% +12.51% > Zagreb 1862.84 1869.79 -0.37% -6.62% Belgrade <.BELEX1 706.96 706.54 +0.06% -1.45%

5>

Sofia 711.69 712.97 -0.18% +21.36%

BONDS

Yield Yield Spread Daily (bid) change vs Bund change in Czech Republic spread 2-year <CZ2YT=R -0.096 0.105 +057bps +12bps

R>

5-year <CZ5YT=R -0.004 0.022 +016bps +4bps

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10-year <CZ10YT= 0.895 -0.04 +039bps -1bps

RR> Poland

2-year <PL2YT=R 1.836 0.008 +250bps +3bps

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5-year <PL5YT=R 2.651 -0.013 +282bps +0bps

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10-year <PL10YT= 3.285 -0.004 +278bps +2bps

RR>

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M interbank Czech Rep 0.49 0.61 0.69 0

<PRIBOR=

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Hungary 0.21 0.23 0.27 0.15 Poland 1.753 1.781 1.827 1.73

Note: FRA quotes are for ask prices

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(Additional reporting by Marcin Goettig in Warsaw and Jason Hovet in Prague; Editing by Hugh Lawson)