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CEE MARKETS-Zloty reverses plunge as president says to veto court bills

* Zloty rebounds towards biggest daily gain for months

* Sentiment good as ECB signalled no withdrawal of stimulus

* Forint gets stuck near 8-month highs versus the euro

BUDAPEST, July 24 (Reuters) - The Polish zloty jumped against the euro on Monday, prompting gains by other Central European currencies, after Polish President Andrzej Duda said he would veto disputed legislation to reform the judiciary . The decision was surprising as Duda has been seen as an ally of the ruling, nationalist-minded Law and Justice party, which on Saturday dismissed concerns on the part of the European Union and the United States, as well as mass street protests at home, over its plan to overhaul the Supreme Court. The zloty had plunged due to the standoff. It touched a new three-month low against the euro early in the day, then reversed course after Duda's announcement. At 0853 GMT, it was headed for its biggest intraday gain in several months, trading at 4.242, up half a percent. Polish government bond prices also rose, with yields dropping by 2 to 3 basis points, outperforming their Hungarian peers. Polish 10-year debt traded at a yield of 3.245 percent, down 3 basis points. The European Union has threatened Poland with sanctions if it sticks to the judicial reforms, which Brussels said would put courts under government control, undermining democracy. But Hungarian Prime Minister Viktor Orban, whose government has also drawn criticism from abroad over perceived attacks on democratic checks and balances, said that Budapest would defend Poland against an EU "inquisition". Before Duda's announcement, Raiffeisen analyst Wolfgang Ernst put a short-term "sell" recommendation on the zloty until there were signs that the court reform issue would be resolved. "Only thereafter would we expect PLN to re-enter into its medium-term appreciation trend that should take EUR/PLN towards 4.10, supported by good economic conditions as well as possible recurring (central bank) rate hike speculation," he said in a note. The general sentiment in the region's markets was positive, after the European Central Bank did not discuss winding down its own monetary stimulus on Thursday. Among regional currencies, the second-biggest gain after the zloty was a 0.13 percent firming of Romania's leu. The forint was a touch weaker, at 305.12, after reaching eight-month highs at 304.7 on Friday. With inflation tame, Hungary's central bank last week flagged possible further monetary easing. Dealers said the central bank would probably prefer a weaker forint, around 310, but currently it was not worried enough to pump additional forint liquidity into markets. "They are unlikely to go against the current international sentiment," one dealer said. "Once correction (forint retreat), which is timely anyway, comes, the bank may also step in."

CEE MARKETS SNAPSH AT 1053 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.033 26.041 +0.03 3.74% 0 5 % Hungary 305.12 305.02 -0.03% 1.21% forint 00 50 Polish zloty 4.2420 4.2636 +0.51 3.82%

%

Romanian leu 4.5639 4.5698 +0.13 -0.63%

%

Croatian kuna 7.4110 7.4115 +0.01 1.94%

%

Serbian dinar 120.15 120.28 +0.11 2.66% 00 00 % Note: daily calculated previo close 1800 change from us at CET

STOCKS

Latest Previo Daily Change

us

close change in

2017

Prague 1002.7 1004.1 -0.15% +8.80 1 9 % Budapest 35592. 35633. -0.12% +11.2 92 91 2% Warsaw 2343.3 2343.1 +0.01 +20.3 2 0 % 0% Bucharest 8353.5 8374.7 -0.25% +17.9 7 1 0% Ljubljana 804.72 806.10 -0.17% +12.1

4%

Zagreb 1870.3 1871.8 -0.08% -6.24% 9 2 Belgrade 709.68 711.19 -0.21% -1.07% Sofia 713.53 711.93 +0.22 +21.6 % 7%

BONDS

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

Republic

2-year -0.025 0.176 +062b +18bp ps s 5-year 0.015 0.046 +021b +6bps

ps

10-year 0.896 0 +041b +1bps

ps Poland

2-year 1.835 -0.012 +248b -1bps

ps

5-year 2.642 -0.025 +283b -1bps

ps

10-year 3.262 -0.022 +277b -1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.46 0.6 0.68 0

IBOR=>

Hungary <BU 0.21 0.23 0.305 0.15

BOR=>

Poland <WI 1.753 1.779 1.822 1.73

BOR=>

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

(Additional reporting by Warsaw newsroom and Jason Hovet in Prague; editing by Mark Heinrich)