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UPDATE 1-CEE MARKETS-Czech crown steadies as investors ponder rate hike chances

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* Investors hold breath ahead of Czech rate meet on Thursday

* Czech rate hike would be first in region since 2013

* Hungary central bank keeps dovish stance

* Forint retreats from highs on central bank minutes

BUDAPEST/PRAGUE, Aug 2 (Reuters) - The crown steadied on Wednesday near one-month lows reached in overnight trade against the euro due to positioning ahead of a likely interest rate hike at the Czech central bank's (CNB) meeting on Thursday. A rise in the Czech benchmark rate, which is currently the lowest in Central Europe at 0.05 percent, would be the first tightening in the region since 2013 and the first in Prague for almost a decade. Other central banks in the region are still in easing mode. The National Bank of Hungary (NBH) kept its dovish message in the minutes of its July policy meeting published on Wednesday, still flagging the possibility of more monetary easing with unconventional tools if necessary. This helped push the forint a bit weaker in the afternoon and at 1250 GMT it was down 0.3 percent from Tuesday. "The NBH published its minutes which did not contain much news, but was fairly dovish," a Budapest-based trader said, adding that this contributed to a retreat in the forint to levels around 304 from 303 hit on Tuesday. That was the strongest the forint had been since the second quarter of 2015.

The forint has also firmed to multi-year highs against the dollar this week. A rate increase in the Czech Republic could boost the forint again to test the level of 303 versus the euro, the Budapest-based trader said. "But that (Czech rate hike) will not have an impact on the Hungarian central bank in terms of policy," he said, referring to the bank's pledge to keep interest rates steady for a sustained period. Analysts say Hungarian rates could remain unchanged this year and next. But there are many in the market who believe a Czech rate hike still cannot be taken for granted, as they say loose European Central Bank (ECB) policy will prevent the bank tightening this month. On the other hand, solid economic growth of around 3 percent expected for this year and next and inflation above target, coupled with wages and house prices soaring, are good arguments for a rate increase. "Front end FRAs did not move much, we still seem to be having a hike priced in only sometimes in November, the curve should catch up if CNB delivers the hike tomorrow," Komercni Banka said in a note on Wednesday. "EURCZK gets weaker again, 26.150 (versus the euro) unlikely to mean much for CNB decision making tomorrow, but a weaker currency is certainly an inflationary factor should there be a larger correction." The crown was trading at around 26.125 versus the euro, up a shade from Tuesday but near one-month lows. Elsewhere, currencies were rangebound while stock markets traded in negative territory, with Bucharest and Budapest bucking the trend. The Hungarian stock market was boosted by a 1.7 percent rise in OTP Bank shares and a 0.8 percent rise in pharmaceuticals firm Richter. Magyar Telekom, which will report second-quarter results at 1600 GMT, was 0.2 percent higher.

CEE MARKETS SNAPSH AT 1450 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in 2017 Czech crown 26.125 26.148 +0.09 3.38% 0 5 % Hungary 304.25 303.42 -0.27% 1.50% forint 00 50 Polish zloty 4.2550 4.2528 -0.05% 3.50% Romanian leu 4.5610 4.5571 -0.09% -0.57% Croatian 7.4060 7.4095 +0.05 2.01% kuna % Serbian 119.85 119.95 +0.08 2.92% 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 1011.8 1014.9 -0.30% +9.79% 6 5 Budapest 35999. 35786. +0.60 +12.49% 95 52 % Warsaw 2381.8 2386.4 -0.19% +22.28% 3 0 Bucharest 8300.1 8285.1 +0.18 +17.15% 0 6 % Ljubljana 809.85 818.74 -1.09% +12.86% Zagreb 1887.4 1889.9 -0.13% -5.38% 2 7 Belgrade 707.17 724.22 -2.35% -1.42% Sofia 713.10 713.30 -0.03% +21.60%

BONDS

Yield Yield Spread Daily (bid) change vs change in

Bund

Czech spread

Republic

2-year 0 0.077 +070b +8bps

ps

5-year 0.068 0.049 +028b +5bps

ps

10-year 0.897 0.017 +040b +1bps

ps Poland

2-year 1.827 0.029 +252b +3bps

ps

5-year 2.701 0.001 +292b +0bps

ps

10-year 3.361 0 +286b -1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interbank

Czech Rep <PR 0.5 0.66 0.75 0

IBOR=>

Hungary <BU 0.21 0.3 0.355 0.15

BOR=>

Poland <WI 1.79 1.81 1.855 1.73

BOR=>

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

(Additional reporting by Jason Hovet, writing by Krisztina Than; Editing by Andrew Heavens and Pritha Sarkar)