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CEE MARKETS-Crown eases, forint jumps; investors weigh interest rate trends

* Crown touches 3-week low, investors mull rate hike odds

* Dollar sell-off helps forint rise to 21-momth high vs euro

* CEE PMIs retreat, but strong euro zone PMIs underpin mood

BUDAPEST, Aug 1 (Reuters) - An unwinding of dollar long positions boosted the forint to multi-year highs against the greenback and the euro on Tuesday despite July data showing a weakening in Central European manufacturing sentiment indexes. Only the crown bucked a strengthening of regional currencies as investors pondered the odds of an interest rate hike at the Czech central bank's meeting on Thursday. A hike would be the first in Prague for almost a decade and the first in the region since early 2013. The tale of the two currencies, the forint and the crown, exemplifies uncertainty over global and regional interest rate trends, market participants said. "The Fed will hike rates and the Czechs will hike rates, and the European Central bank will be less loose, but there is uncertainty over the timing," said Gergely Urmossy, an analyst at Erste Bank in Budapest. He said political uncertainty surrounding the Trump administration in the U.S. caused volatility in the dollar. "The Hungarian (economic and political) stability seems to over-compensate low rates now," Urmossy added. While investors were offloading the dollar globally, the forint could get additional help from flows from the zloty which is under pressure due to a judiciary reform in Poland that is causing tensions with Brussels, market participants said. The forint hit its strongest level against the dollar since late 2013, at 256.25, and one Budapest-based dealer said it may test 250, also helping it versus the euro. Against the euro it touched a 21-month high. Trading at 303.31 at 0956 GMT it was up 0.4 percent even though Hungary's central bank is the most dovish in the region. The crown, meanwhile, was down 0.2 percent to 26.138, after setting a 3-week low, just two days before a possible rate hike. Half of analysts in a Reuters poll last week projected a hike. A weaker crown may put pressure on the bank to lift rates, while rate setters may also argue for a wait-and-see stance. Inflation trends are also uncertain. Poland was the first in the region to release July inflation data on Monday, and its annual figure was slightly higher than expected. Czech, Hungarian and Polish Purchasing Managers' Indexes (PMI) released on Tuesday showed a drop in activity, but still indicated that healthy growth continues. Surging Western European PMIs did not weaken Central European currencies against the euro as the region's exports benefit from a rise in demand in the euro zone. "If Europe performs well, that will also lift Hungary," Urmossy said.

CEE MARKETS SNAPSH AT 1156 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.138 26.084 -0.21% 3.32% 0 0 Hungary 303.31 304.38 +0.35 1.82% forint 00 50 % Polish zloty 4.2527 4.2594 +0.16 3.56%

%

Romanian leu 4.5560 4.5605 +0.10 -0.46%

%

Croatian 7.4090 7.4096 +0.01 1.97% kuna % Serbian 119.92 120.12 +0.17 2.86% dinar 00 00 % Note: daily calculated previo close 1800 change from us at CET

STOCKS

Latest Previo Daily Change

us

close change in

2017

Prague 1012.8 1009.0 +0.37 +9.90 2 4 % % Budapest 35860. 35769. +0.25 +12.0 51 87 % 5% Warsaw 2375.1 2374.1 +0.04 +21.9 6 7 % 3% Bucharest 8304.9 8276.5 +0.34 +17.2 5 5 % 2% Ljubljana 816.56 812.90 +0.45 +13.7 % 9% Zagreb 1892.8 1885.3 +0.40 -5.11% 7 1 % Belgrade 718.38 722.88 -0.62% +0.14

%

Sofia 715.33 715.21 +0.02 +21.9 % 8%

BONDS

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

Republic

2-year -0.077 -0.102 +059b -11bps

ps

5-year 0.064 0.043 +026b +6bps

ps

10-year 0.88 0 +036b +1bps

ps Poland

2-year 1.829 0.006 +250b +0bps

ps

5-year 2.714 -0.032 +291b -1bps

ps

10-year 3.37 0.012 +285b +3bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.51 0.66 0.75 0

IBOR=>

Hungary <BU 0.21 0.25 0.31 0.15

BOR=>

Poland <WI 1.79 1.797 1.844 1.73

BOR=>

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

(Reporting by Sandor Peto; Editing by Mark Potter)