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CEE MARKETS-Zloty, crown rise as GDP data confirm robust CEE growth

* GDP growth is robust, mostly above forecasts: zloty, crown firm

* Leu eases, Romanian GDP growth surge to 5.9 pct leaves risks

(Adds Serbian central bank forecast, Bulgaria, Slovakia, and bond markets) BUDAPEST, Aug 16 (Reuters) - The zloty led Central Europe's main currencies higher on Wednesday after figures for the second quarter showed the region's economic growth remained strong. Poland's annual economic growth slowed from 4 percent in the first quarter, but at 3.9 percent was a tick above analysts' forecasts. The zloty gained 0.64 percent, reaching 4.268 against the euro by 1310 GMT. Polish government bonds were steady as robust growth pointed to inflation risks. "Fears of conflict between the United States and North Korea decreased considerably, but Polish GDP data turned out to be so solid that investors don't rush to buy Polish papers (debt)," said Piotr Poplawski, senior economist in ING BSK. Central European economies are powering ahead, helped by demand for their exports, European Union funding inflows and rising real wages. Pay has risen fastest in Romania, and according to Wednesday's data, its annual economic growth accelerated to 5.9 percent from 5.7 percent in the first quarter. However, the wage increases are fueled by government policy, which has led to fears of a rise in the budget deficit and inflation. The leu, which is usually slow to react to economic data, hit a six-week low despite the figures, shedding 0.2 percent to 4.583. Romanian bond yields rose by a few basis points. "It (the figures) should be slightly positive for the Romanian leu but negative for government bonds as the output gap looks set to widen further, increasing the chances for inflation to rise even faster than expected," said Ciprian Dascalu, chief economist at ING in Romania. Czech quarterly growth, at 2.3 percent, was the strongest on record. Commerzbank raised its forecast for Czech growth in 2017 to 4.3 percent from 2.9 percent, in a note. The jump may heighten expectations the Czech central bank will continue to tighten policy to fight inflation. Early this month, it became the first in the European Union to raise interest rates since 2012. "The positive surprise can cause a capital inflow ... an increase... would pose a risk that (the central bank's) communication will become more hawkish in the coming months," Erste analyst Jiri Polansky said in a note. The crown touched its strongest levels since Aug. 4. It firmed 0.4 percent to 26.045. Hungary's forint was flat. Hungary's annual economic growth slowed to 3.2 percent from 4.2 percent in the first quarter, below forecasts by analysts of 3.7 percent, but the outlook remains strong, analysts said. Elsewhere, growth picked up to 3.6 percent in Bulgaria and to 3.3 percent in Slovakia in the second quarter. Serbia's central bank maintained its 3 percent economic growth forecast for 2017, warning over risks. But the dinar gained 0.1 percent to 119.25, trading near its strongest levels since 2014.

CEE MARKETS SNAPSH AT 1510 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.045 26.153 +0.42 3.69% 0 5 % Hungary 304.29 304.19 -0.03% 1.49% forint 00 50 Polish zloty 4.2680 4.2955 +0.64 3.18%

%

Romanian leu 4.5830 4.5740 -0.20% -1.05% Croatian 7.3920 7.3935 +0.02 2.21% kuna % Serbian 119.25 119.36 +0.09 3.44% 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 1033.9 1032.5 +0.14 +12.1 3 0 % 9% Budapest 36911. 36775. +0.37 +15.3 63 94 % 4% Warsaw 2399.6 2376.6 +0.97 +23.1 1 6 % 9% Bucharest 8264.3 8334.2 -0.84% +16.6 6 8 5% Ljubljana 805.20 805.67 -0.06% +12.2

1%

Zagreb 1902.3 1897.5 +0.25 -4.64% 1 1 % Belgrade 718.19 715.89 +0.32 +0.11 % % Sofia 731.49 729.28 +0.30 +24.7 % 4%

BONDS

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

Republic

2-year 0.026 0.089 +072b +8bps

ps

5-year 0.072 0.013 +031b -1bps

ps

10-year 0.877 -0.005 +042b -4bps

ps Poland

2-year 1.857 0.009 +255b +0bps

ps

5-year 2.737 0.002 +297b -2bps

ps

10-year 3.409 0.003 +295b -3bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.57 0.67 0.77 0

IBOR=>

Hungary <BU 0.245 0.31 0.38 0.15

BOR=>

Poland <WI 1.764 1.796 1.845 1.73

BOR=>

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

(Additional reproting by Radu Marinas in Bucharest/Robert Muller in Prague/Bartosz Chmielewski in Warsaw; Editing by Larry King)