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CEE MARKETS-Zloty steadies under shadow of Polish political turmoil

* Zloty steadies despite uncertainties over Polish reform

* Forint retreats behind key 305 line versus euro

* Czech crown stuck at 26/euro, rate hike possible

BUDAPEST, July 25 (Reuters) - The zloty steadied on Tuesday following recent jitters prompted by political wrangling over reforms which increase Poland's right-wing government's influence over the judiciary. Poland's currency traded steady at 4.2545 versus the euro at 0847 GMT, while other Central European currencies were mixed as investors await clues over global interest rate trends from the Fed's two-day meeting on Tuesday and Wednesday. The zloty rebounded from 3-month lows hit on Monday, after President Andrzej Duda unexpectedly announced that he would veto two of three reform bills passed by parliament which determine the make-up of the Supreme Court. The eurosceptic Law and Justice party's (PiS) reforms have triggered nationwide street protests and threats of European Union sanctions. Duda had been seen as an ally of PiS and his intervention also caused uncertainty over Poland's domestic politics, including some speculation of early elections. However, the currency rebounded in the morning session as market analysts dismissed the likelihood of this. "To the extent to which PLN weakened yesterday afternoon due to speculation over early parliamentary elections, this weakness should partly reverse today," ING said in a note, adding that the rebound could help the leu. The Polish presidential veto does not remove political uncertainty weighing on Polish asset prices, analysts said. "We would simply regard this as a breather for the zloty given that the ruling PiS party will likely not back down from its policies easily," Raiffeisen analyst Wolfgang Ernst said in a note. "The next relevant date for PLN movement should now be on Wednesday when the EU will meet to discuss the topic," he added. The forint, meanwhile, eased slightly, retreating from 305 against the euro, which it briefly crossed on Monday after the Hungarian central bank pumped additional liquidity into interbank markets through its fx swap tenders. But dealers said the forint's retreat was caused by technical reasons rather than the tenders as it had become oversold against the euro, while it was also giving up some of its gains in its zloty cross. "It is justified if the forint outperforms the zloty now... but its firming seems to have lost steam," one Budapest-based currency dealer said. The Czech crown continued to hover on the weak side of the 26 line against the euro, firmer from Monday, with some investors expecting the Czech central bank to start to lift interest rates on Aug. 3, for the first time in almost a decade.

CEE MARKETS SNAPSH AT 1047 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.020 26.036 +0.06 3.79% 0 5 % Hungary 305.42 305.20 -0.07% 1.11% forint 00 50 Polish zloty 4.2545 4.2545 +0.00 3.51%

%

Romanian leu 4.5640 4.5646 +0.01 -0.64%

%

Croatian kuna 7.4115 7.4115 +0.00 1.94%

%

Serbian dinar 120.45 120.51 +0.05 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 1011.1 1007.6 +0.35 +9.72 7 7 % % Budapest 35355. 35362. -0.02% +10.4 70 83 8% Warsaw 2329.1 2334.6 -0.24% +19.5 4 9 7% Bucharest 8329.4 8340.2 -0.13% +17.5 4 3 6% Ljubljana 807.22 804.69 +0.31 +12.4 % 9% Zagreb 1877.1 1878.6 -0.08% -5.90% 2 6 Belgrade 717.28 718.11 -0.12% -0.01% Sofia 712.27 712.83 -0.08% +21.4

6% BONDS

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

Republic

2-year -0.046 -0.02 +061b -3bps

ps

5-year -0.018 0 +017b +0bps

ps

10-year 0.941 0.029 +043b +2bps

ps Poland

2-year 1.828 -0.012 +248b -2bps

ps

5-year 2.639 -0.003 +282b -1bps

ps

10-year 3.281 0.006 +277b +0bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.48 0.64 0.72 0

IBOR=>

Hungary <BU 0.2 0.235 0.31 0.15

BOR=>

Poland <WI 1.753 1.779 1.821 1.73

BOR=>

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

(Additional reporting by Radu Marinas in Bucharest; editing by Alexander Smith)