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CEE MARKETS-Bond yields jump as U.S. data boost Fed rate hike odds

* Polish 10-year bond yield trades at 6-and-1/2-month high

* Romanian bonds lead jump on strong U.S. wage data

* Romanian liquidity squeeze may remain, central bank watched

* Zloty, forint ease on selling due to dollar gains

(Recasts with impact of U.S. figures) BUDAPEST/BUCHAREST, Oct 6 (Reuters) - Central European debt yields rose further on Friday after U.S. data showing a strong rise in wages boosted expectations for a Federal Reserve rate hike in December. Higher U.S. interest rates make debt yields in the European Union's emerging markets relatively less attractive. "Core market yields rose a bit, while emerging market yields kind of exploded," one Budapest-based fixed income trader said. The data also strengthened the dollar, and capital flows into the greenback have tended to weaken the zloty and the forint, Central Europe's most liquid currencies, in the past weeks. The zloty eased 0.2 percent against the euro to 4.3115 by 1330 GMT. The forint shed 0.1 percent to 312.31. The crown, buoyed by expectations that the Czech central bank will further increase interest rates, was almost steady, just like the leu which has been supported this week Romanian government bond yields, however, led the regionwide rise. Romania's government on Thursday rejected all bids at a bond tender for the first time since March, unwilling to tolerate a yield rise amid low demand. But expectations for a jump in the budget deficit late this year and a rise in inflation have weighed on Romania's debt market. Yields on the country's 2018- and 2019-expiry bonds, which rose by 5-7 basis points in the morning, surged by further 10 basis points after the U.S. data, to 1.74 and 1.98 percent, respectively. The 10-year bond yield, which was steady in early trade, rose 7 basis points to 4.10 percent. Poland's corresponding yield jumped 12 basis points to 3.50 percent, while Hungary's 10-year yield was up 9 basis points at 2.75 percent. Romania's three-month interbank rate was set at 1.78 percent, remaining near three-year highs, even though the central bank injected 9.4 billion lei into the market through a repo tender on Tuesday. The usual wage and other payments around Oct. 10 may not ease the liquidity shortage because dividend payments by state-owned companies and improved tax collection have pumped lei out of markets. A seasonal jump in government spending late in the year may increase liquidity, but may also weigh on the leu, which traded a touch off seven-week highs against the euro. Concern over a rise in the deficit may prompt Standard & Poor's to revise the outlook for its rating for Romania to negative in a review late on Friday, Raiffeisen said in a note. Czech bond yields rose by 4-6 basis points, with 10-year bonds bid at 1.736 percent.

CEE MARKETS SNAPSH AT 1530 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.830 25.833 +0.01 4.56% 0 5 % Hungary 312.31 311.94 -0.12% -1.12% forint 00 00 Polish zloty 4.3115 4.3023 -0.21% 2.14% Romanian leu 4.5750 4.5742 -0.02% -0.87% Croatian 7.5000 7.5060 +0.08 0.73% kuna % Serbian 119.09 119.09 +0.00 3.58% 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 1060.5 1057.3 +0.30 +15.0 9 9 % 8% Budapest 37945. 37876. +0.18 +18.5 80 47 % 7% Warsaw 2470.0 2463.4 +0.27 +26.8 5 5 % 0% Bucharest 7970.3 7904.6 +0.83 +12.4 2 2 % 9% Ljubljana 799.73 801.09 -0.17% +11.4

5%

Zagreb 1812.8 1800.9 +0.66 -9.12% 7 8 % Belgrade 726.08 722.11 +0.55 +1.21 % % Sofia 676.88 672.93 +0.59 +15.4 % 2%

BONDS

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

Republic

2-year 0.37 0.035 +105b +2bps

ps

5-year 0.447 0.056 +068b +3bps

ps

10-year 1.376 0.034 +088b -1bps

ps Poland

2-year 1.746 0.024 +242b +1bps

ps

5-year 2.793 0.087 +303b +6bps

ps

10-year 3.503 0.11 +301b +7bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.75 0.91 1.04 0

IBOR=>

Hungary <BU 0.07 0.11 0.14 0.03

BOR=>

Poland <WI 1.772 1.828 1.896 1.73

BOR=>

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

(Additional reporting by Bartosz Chmielewski in Warsaw, editing