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CEE MARKETS-Currencies, bonds firm as ECB seen extending asset buying

* Forint, zloty set multi-week highs on ECB expectations

* U.S. CPI data watched, but Dec Fed hike is priced anyway

* Hawkish rate setter comments give limited help to crown

BUDAPEST, Oct 13 (Reuters) - Central European currencies and government bonds mostly firmed slightly after sources told Reuters that the European Central Bank is likely to extend its asset purchases. The also crown got some support from hawkish comments from Czech central banker Vojtech Benda. And Romania's ruling Social Democrats, at a party meeting late on Thursday, endorsed a proposed government reshuffle, which had been weighing on Bucharest asset prices. But price movements in regional markets were limited due to the caution ahead of U.S. inflation figures due in the afternoon. Signs of the Fed moving towards an interest rate rise could make regional assets less attractive as the potential reward over U.S. assets diminishes. "The figures, even if they increase the odds of a December Fed rate hike, could not cause a big market retreat: a hike looks like a done deal, anyway," one Budapest-based fixed income trader said. "The report on the ECB had more weight: markets have taken it as a dovish signal," the trader added. Five people with direct knowledge of the discussion told Reuters that ECB policymakers broadly agreed to extend asset purchases at a lower volume at their October meeting, with views converging on a nine-month extension, and ranging between 25 billion and 40 billion euros a month, compared with 60 billion euros now. The ECB's asset purchases in the euro zone have indirectly also lifted demand for relatively high-yielding Central European assets. Hungarian government bond yields dropped by 2-3 basis points. The 10-year benchmark paper traded at 2.59 percent. The Polish yield curve flattened a little, with the 10-year yield dropping 4 basis points to 3.335 percent, its lowest level since a downtrend of the dollar started to trigger zloty and forint buying early this month. The zloty, gaining 0.2 percent by 0858 GMT, hit a one-month high against the euro. The forint firmed 0.1 percent to 308.35, touching a 3-week high. Piercing its 200-day moving average, it may head to 307, Erste Group's Budapest brokerage arm said in a note. Its firming through 310 on Wednesday already boosted speculation that the Hungarian central bank may further loosen monetary policy screws. In Poland, FRAs <PLN12X15F= > have showed an opposite trend, with expectations strengthening that the Polish central bank will start to hike interest rates earlier than late 2018. The Czech has been the only central bank in the European Union that has increased rates since 2012. The economy would benefit from a 50-75 basis point interest rate increase before the end of this year, one of the seven Czech central bank rate setters, Vojtech Benda was quoted as saying on Thursday. The crown firmed only 0.1 percent on Friday to 25.843 against the euro. "Mr. Benda is just one of 7 illuminatis," Komercni Banka traders said in a note.

CEE MARKETS SNAPSH AT 1058 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.843 25.868 +0.10 4.50% 0 5 % Hungary 308.35 308.60 +0.08 0.15% forint 00 50 % Polish zloty 4.2604 4.2675 +0.17 3.37%

%

Romanian leu 4.5880 4.5890 +0.02 -1.16%

%

Croatian 7.5100 7.5097 +0.00 0.60% kuna % Serbian 119.30 119.36 +0.05 3.39% 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 1053.0 1054.8 -0.17% +14.2 4 8 6% Budapest 38591. 38772. -0.46% +20.5 98 08 9% Warsaw 2532.8 2537.6 -0.19% +30.0 2 9 3% Bucharest 8030.9 7997.2 +0.42 +13.3 0 2 % 5% Ljubljana 815.87 813.57 +0.28 +13.7 % 0% Zagreb 1862.0 1863.2 -0.07% -6.66% 7 9 Belgrade 725.54 727.79 -0.31% +1.14

%

Sofia 669.78 668.31 +0.22 +14.2 % 1%

BONDS

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

Republic

2-year 0.086 0 +081b +1bps

ps

5-year 0.527 0.014 +082b +3bps

ps

10-year 1.366 -0.006 +094b +2bps

ps Poland

2-year 1.714 -0.007 +243b +0bps

ps

5-year 2.681 -0.005 +298b +2bps

ps

10-year 3.343 -0.024 +292b +0bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.78 0.91 1.03 0

IBOR=>

Hungary <BU 0.08 0.11 0.15 0

BOR=>

Poland <WI 1.764 1.805 1.874 1.73

BOR=>

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

(Additional reporting by Jason Hovet in Prague; Editing by Alison Williams)