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CEE MARKETS-Crown eases somewhat despite rate hike expectations

BUDAPEST, July 28 (Reuters) - The crown eased slightly on Friday with markets scaling back a touch ahead of next week's Czech central bank (CNB) meeting at which policymakers could deliver its first rate hike in almost a decade. Other Central European currencies were mostly slightly firmer after less hawkish than expected comments from the Federal Reserve earlier this week. The Czechs could soon become the first in the region to start to lift interest rates after years of cuts to record lows. In a Reuters poll published on Friday, 8 of 16 analysts projected a rate hike for the CNB's Aug. 3 meeting, and 3 for September. This is up from only one of 14 analysts forecasting an August move in the previous poll in June. "The outcome will be really interesting, because a rate hike is not priced in, while according to the (tight) market consensus the CNB should hike its repo rate from 0.05 percent to 0.25 percent next Thursday," KBC analysts said in a note. The crown, which has been testing the 26 level against the euro in the past week, still weakened a tad to 26.057 by 0914 GMT in thin turnover. Investors flooded Czech markets with tens of billions of euros before the CNB ended a cap on the crown in April, betting on the crown strengthening. If they soon exit those positions, the crown may fall, and this may push the CNB towards a rate hike, some analysts said. Elsewhere in Central Europe, Poland's zloty weakened by 0.2 percent after an initial rise. The zloty has been under pressure since last week after parliament passed three bills to reform the judiciary. Domestic protests against the alleged politicization of the judiciary abated after Polish President Andrzej Duda refused to sign two of the bills. But the European Commission has launched a new legal case against Poland over the reforms. The head of Poland's nationalist-minded ruling party PiS said late on Thursday it will wait for proposals from Duda, but a radical reform of the judiciary was still needed. Romania's leu firmed 0.1 percent to 4.56 versus the euro. Its finance minister said late on Thursday that the government was sticking to earlier tax cut plans, instead of pursuing more radical course that had worried investors.

CEE MARKETS SNAPSH AT 1114 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.057 26.049 -0.03% 3.65% 0 0 Hungary 305.34 305.58 +0.08 1.14% forint 00 00 % Polish zloty 4.2596 4.2524 -0.17% 3.39% Romanian leu 4.5600 4.5650 +0.11 -0.55%

%

Croatian kuna 7.4125 7.4145 +0.03 1.92%

%

Serbian dinar 120.18 120.30 +0.10 2.64% 00 00 % Note: daily calculated previo close 1800 change from us at CET

STOCKS

Latest Previo Daily Change

us

close change in

2017

Prague 1007.6 1014.8 -0.72% +9.33 3 9 % Budapest 35811. 35828. -0.05% +11.9 15 70 0% Warsaw 2333.2 2350.9 -0.75% +19.7 3 1 8% Bucharest 8324.1 8319.5 +0.05 +17.4 3 7 % 9% Ljubljana 810.14 809.98 +0.02 +12.9 % 0% Zagreb 1889.1 1888.1 +0.05 -5.30% 2 1 % Belgrade 724.24 721.31 +0.41 +0.96 % % Sofia 709.65 711.64 -0.28% +21.0

1% BONDS

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

Republic

2-year 0 0 +066b -1bps

ps

5-year 0.073 0.037 +022b +0bps

ps

10-year 0.895 0.015 +033b -3bps

ps Poland

2-year 1.808 -0.004 +247b -2bps

ps

5-year 2.671 0.014 +282b -2bps

ps

10-year 3.333 0.018 +276b -2bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.52 0.69 0.77 0

IBOR=>

Hungary <BU 0.2 0.26 0.36 0.15

BOR=>

Poland <WI 1.755 1.787 1.833 1.73

BOR=>

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

(Additional reporting from Radu Marinas in Bucharest, Jason Hovet in Prague and Warsaw editorial; editing by Mark Heinrich)