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CEE MARKETS-Zloty extends gains as Sept CPI comes in above forecasts

* Zloty hits 6-1/2-month low overnight, rebounds on Friday

* 2.2 pct Sept CPI, above forecasts, buoys Polish currency

* Polish, Hungarian bonds firm again after earlier retreat

* Crown jumps to strongest level since Aug. 3 rate hike

(Recasts with Polish inflation figure, Czech crown rise) BUDAPEST/WARSAW, Sept 29 (Reuters) - The zloty extended gains against the euro on Friday after flash September data showed a bigger-than-expected rise in Polish inflation, which may worry some central bank rate-setters. After hitting 6-1/2-month lows overnight, the currency rebounded in early trade even ahead of the data, which analysts had expected to show a rise in annual inflation to 2 percent from 1.8 percent in August. But the figures released in the afternoon showed inflation rising to 2.2 percent. 4.299. Polish government bond yields reversed an earlier fall and rose 2-3 basis points from levels before the inflation figures, with 10-year paper trading at 3.3375 percent. The inflation figures could have led to a bigger fall in bond prices, but the fourth-quarter issuance figures released by the government later limited the loss, said Arkadiusz Urbaski, analyst at Pekao SA. "The bond supply ... is quite supportive, because a suprisingly low amount will be issued in next three months," he said. "It is (however) going to only limit the yield rise and is not enough to stop trends in markets." Poland has financed 86 percent of planned borrowing needs for 2017 by the end of September, Deputy Finance Minister Piotr Nowak said in a statement. The zloty and the forint, Central Europe's most liquid currencies, were sold off earlier this week as investors flocked into the dollar after hawkish comments from Federal Reserve Chair Janet Yellen. Local factors had also helped the currencies fall - new Polish proposals for judiciary reform which angered the European Commission, and a new round of monetary easing measures in Budapest. Appetite for the dollar receded in global markets on Friday, and that helped Central European currencies. Both the forint and the Czech crown strengthened marginally, settling at 4.6. On Wednesday the Czech National Bank disappointed some investors by not lifting interest rates further to defend its inflation target, after a rate hike on Aug. 3, the first in the European Union since 2012. But the bank's hawkish comments keep expectations alive that it will lift rates at its next meeting in November. The crown, touching 25.924 against the euro, reached its strongest levels since the August rate hike. Foreign investors sitting on a huge pile of long crown positions are closely watching the Czech unit's strength. If it rises, some may take the opportunity to take profits by selling it.

CEE MARKETS SNAPSH AT 1514 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.995 26.039 +0.17 3.89% 0 0 % Hungary 310.65 311.13 +0.15 -0.59% forint 00 00 % Polish zloty 4.2990 4.3154 +0.38 2.44%

%

Romanian leu 4.6005 4.6030 +0.05 -1.42%

%

Croatian 7.4955 7.4915 -0.05% 0.80%

kuna

Serbian 119.02 119.25 +0.19 3.64% 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 1044.8 1043.6 +0.11 +13.3 7 8 % 7% Budapest 37612. 37191. +1.13 +17.5 38 65 % 3% Warsaw 2460.4 2427.0 +1.37 +26.3 0 4 % 1% Bucharest 7900.9 7934.6 -0.42% +11.5 1 3 2% Ljubljana 796.55 800.48 -0.49% +11.0

0%

Zagreb 1811.5 1821.3 -0.53% -9.19% 8 2 Belgrade 720.76 723.17 -0.33% +0.47

%

Sofia 689.22 689.37 -0.02% +17.5

3% BONDS

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

Republic

2-year 0.157 -0.039 +085b -4bps

ps

5-year 0.32 0.072 +060b +9bps

ps

10-year 1.221 -0.008 +077b +2bps

ps Poland

2-year 1.755 0.021 +245b +2bps

ps

5-year 2.706 0.009 +298b +3bps

ps

10-year 3.369 0.011 +292b +4bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.75 0.88 1.02 0

IBOR=>

Hungary <BU 0.09 0.11 0.165 0.04

BOR=>

Poland <WI 1.775 1.8225 1.875 1.73

BOR=>

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

(Additional reporting by Bartosz Chmielewski in Warsaw; editing