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CEE MARKETS-Forint eases, central bank may try to talk currency down

* Forint weaker ahead of Tuesday's central bank meeting Central bank may try to talk forint down-dealers

* Zloty shrugs off unconfirmed report on PM

BUDAPEST, Aug 21 (Reuters) - The forint eased on Monday, while most central European currencies were treading water, amid some expectations that the Hungarian central bank (NBH) could try to weaken the currency in the statement it issues after a rate-setting meeting on Tuesday. The region's most dovish central bank is expected to keep its record-low interest rates on hold this year and next, not tracking the footsteps of its Czech peer which early this month delivered the European Union's first rate hike since 2012. With Hungary's inflation seen near 3 percent, the middle of the NBH's target range, in coming years, the bank is unlikely to rush into interest rate normalization. Robust regional economic growth, and a big Hungarian trade surplus, have been boosted the forint to levels which dealers said the bank probably finds too strong. "The bank would probably not like the forint to go near 300 against the euro and get stuck there," one Budapest-based currency dealer said. "There is a slight chance that the bank will indicate that (stance) somehow tomorrow, on top of what it said in the past. But it will be one headline at the most, rather than a flurry," the dealer said. The forint touched a three-week high against the euro on Monday before retreating. It traded at 303.7 by 0804 GMT, down 0.1 percent, but still near its strongest level since May 2015. Hungarian government bonds were steady. Recent economic growth and inflation data should have fed the NBH's ultra-dovish stance, Raiffeisen analyst Stephan Imre said in a note. "This should keep the steepness of the HGB (Hungarian government bond) curve at elevated levels in the upcoming period, with the latter mainly being a phenomenon driven by ultra-low short-end levels on the back of excess liquidity conditions," Imre added. In Bucharest, an auction of eight-year bonds could draw good demand on Monday, as Romanian bonds underperformed regional peers in the recent sessions, ING analysts said in a note. Regional assets were mostly rangebound in slow summer trade ahead of the U.S. Federal Reserve's annual central banking symposium in Jackson Hole later in the week. The zloty, trading flat, shrugging off a report in daily Rzeczpospolita that the ruling Law and Justice (PiS) party are considering replacing Prime Minister Beata Szydlo with PiS leader Jaroslaw Kaczynski as a response to a more assertive stance by President Andrzej Duda. A government spokesman was not immediately available to comment.

CEE MARKETS SNAPSH AT 1004 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.098 26.098 +0.00 3.48% 0 5 % Hungary 303.70 303.33 -0.12% 1.69% forint 00 00 Polish zloty 4.2759 4.2769 +0.02 2.99%

%

Romanian leu 4.5885 4.5892 +0.02 -1.17%

%

Croatian 7.4030 7.3995 -0.05% 2.05%

kuna

Serbian 119.36 119.41 +0.04 3.34% 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 1030.2 1033.0 -0.27% +11.7 2 4 8% Budapest 37004. 36969. +0.10 +15.6 72 15 % 3% Warsaw 2363.6 2359.8 +0.16 +21.3 8 7 % 4% Bucharest 8340.2 8302.8 +0.45 +17.7 8 6 % 2% Ljubljana 809.64 810.23 -0.07% +12.8

3%

Zagreb 1903.5 1901.0 +0.13 -4.58% 6 2 % Belgrade 721.07 721.01 +0.01 +0.52 % % Sofia 723.60 722.69 +0.13 +23.3 % 9%

BONDS

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

Republic

2-year -0.026 0 +068b +1bps

ps

5-year 0.052 0 +033b +1bps

ps

10-year 0.869 -0.013 +046b -1bps

ps Poland

2-year 1.79 -0.024 +250b -2bps

ps

5-year 2.652 0.009 +293b +2bps

ps

10-year 3.315 0 +291b +1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.6 0.69 0.8 0

IBOR=>

Hungary <BU 0.21 0.25 0.31 0.15

BOR=>

Poland <WI 1.76 1.787 1.832 1.73

BOR=>

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

(Reporting by Sandor Peto; Editing by David Holmes)