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CEE MARKETS-Fx, stocks retreat on Korea, economies remain supportive

* Budapest, Warsaw retreat after strong gains on Korean tension

* Zloty, forint lead easing of currencies

* Economic data could fuel optimism, Hungarian central bank dovish

BUDAPEST, Aug 29 (Reuters) - Central European stocks and currencies eased on Tuesday as risk aversion gripped global markets after a new missile test by North Korea reignited concerns over its tense relations with the United States. In equities markets, Budapest and Warsaw led the decline after recent strong gains. Budapest's main index shed 1.8 percent by 0854 GMT, off a new record high set on Monday. Warsaw's bluechip index fell 1.3 percent, retreating from a 28-month high in the previous session, led by a fall in the shares of BZ WBK. The bank's stocks reached its highest level since April 2015 on Monday. The zloty shed almost half a percent against the euro to trade at 4.2655, off four-week highs set on Monday. The zloty and the forint were buoyed in the past weeks by macroeconomic figures which showed robust growth in Central Europe. The upbeat figures have not led to a hawkish turn in monetary policy in Hungary and Poland unlike in the Czech Republic where the central bank early this month launched the European Union's first rate hike in more than five years. Hungary's central bank (NBH) even flagged more easing via its unconventional tools last week, knocking down the forint from 28-month highs at 301.72 on Thursday. S&P lifted the outlook on Hungary's sovereign rating to positive from stable late on Friday, but after the NBH comments the forint has been unable to benefit from the change. On Tuesday it eased 0.2 percent to 304.84. The jury is out on how it will behave after manufacturing sector activity (PMI) data due in the region's main countries on Friday, which may confirm robust growth. "Hungarian PMI data are less indicative as elsewhere. Their strong levels in the past months did not correlate with industrial output," said Gergely Urmossy, analyst of Erste group in Budapest. "If the figures still lift the forint, it will happen through an improved regional sentiment," he said, adding that he expected the forint to continue to retreat in the longer term. Before Tuesday's bout of risk aversion, regional assets were also buoyed by a meeting of central bankers in Jackson Hole on Friday which did not show a drift towards more hawkish monetary policies in the United States and the euro zone. The dollar's slide also supports regional currencies and government bonds. Bond yields shed 1-2 basis points in Poland and 2-3 basis points in Hungary. Bonds bucked the trend in Romania where concerns over a rising budget deficit persist.

CEE MARKETS SNAPSH AT 1054 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.111 26.101 -0.04% 3.43% 0 0 Hungary 304.84 304.29 -0.18% 1.31% forint 00 00 Polish zloty 4.2655 4.2468 -0.44% 3.24% Romanian leu 4.6032 4.5980 -0.11% -1.48% Croatian 7.4117 7.4143 +0.04 1.93% kuna % Serbian 118.97 119.10 +0.11 3.68% 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 1025.4 1035.9 -1.01% +11.2 7 1 7% Budapest 37427. 38097. -1.76% +16.9 55 59 5% Warsaw 2497.7 2531.3 -1.33% +28.2 1 1 2% Bucharest 8296.8 8363.1 -0.79% +17.1 7 4 0% Ljubljana 825.56 824.53 +0.12 +15.0 % 5% Zagreb 1895.4 1899.5 -0.22% -4.98% 0 0 Belgrade 720.46 724.75 -0.59% +0.43

%

Sofia 714.51 713.94 +0.08 +21.8 % 4%

BONDS

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

Republic

2-year -0.016 0 +075b +1bps

ps

5-year 0.069 0.051 +044b +9bps

ps

10-year 0.899 0.015 +057b +6bps

ps Poland

2-year 1.726 -0.007 +249b +1bps

ps

5-year 2.599 -0.021 +297b +2bps

ps

10-year 3.279 0.009 +295b +6bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.6 0.7 0.79 0

IBOR=>

Hungary <BU 0.21 0.225 0.255 0.15

BOR=>

Poland <WI 1.763 1.783 1.825 1.73

BOR=>

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

(Additional reporting by Luiza Ilie in Bucharest/Bartosz Chmielewski in Warsaw; Editing by Richard Balmforth)