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CEE MARKETS-Zloty rallies on data, rate hike bets boost Czech crown

* Crown strongest vs euro for years on rate hike bets

* Zloty, forint firms to multi-week highs

* Zloty ignores dropping IMF credit line, helped by data

* Bucharest rejects all bids at debt auction again

(Adds Polish economic data, dealer quote, Hungarian and Romanian tenders) BUDAPEST, Oct 16 (Reuters) - Central European currencies extended last week's gains on Monday, with interest rate hike expectations lifting the Czech crown and improving current account data buoying Poland's zloty. Global investor sentiment remains positive towards emerging markets, dealers said. The zloty led the currency gains in Central Europe, touching six-week highs and testing 3-month highs against the euro as Poland's August current account deficit came in at 100 million euros, well below expectations. At 1349 GMT it traded at 4.2355, up 0.4 percent. The deficit has narrowed even though the economy is growing robustly, and a batch of Polish economic figures due this week are expected to confirm this. "On Wednesday we will have industrial output and retail sales data and that's what the market will focus on. Robust readings may result in further zloty appreciation," said BZ WBK dealer Adam Wardzilak. The zloty shrugged off an announcement made by the Finance Ministry on Saturday that Poland would quit a precautionary Flexible Credit Line from the International Monetary Fund.

The crown traded at 25.755, up by a third of a percentage point. It reached levels seen before the Czech central bank (CNB) launched an intervention regime in 2013, and gained on chances of more interest rate hikes to come. The Czech economy would benefit from a 50-75 basis point interest rate increase before the end of 2018, CNB board member Vojtech Benda was quoted as saying on Thursday. The currency usually ignores politics, and it has not been affected by the prospect of Czech voters handing victory - according to opinion polls - to tough-talking populist billionaire Andrej Babis in a parliamentary election at the end of this week. Babis has signalled he is ready to take a more combative approach towards the European Union, though he is not expected to strain ties with Brussels as much as the nationalist governments in Poland and Hungary have done. The forint and the leu also firmed on Monday, but underperformed the crown and the zloty. Hungarian central bank (NBH) Deputy Governor Marton Nagy spurred expectations for further monetary easing in dovish comments on Friday, but failed to talk down the forint. The forint even touched a 5-week high against the euro. The NBH's weekly fx swap auction on Monday did not weaken the forint as the central bank did not tender the most liquid 12-month expiry, traders said. Elsewhere, Romania is planning a controversial shakeup of the judiciary, as has happened already in Poland, and that issue is weighing on Romanian assets. The government rejected all bids at a tender of 2019-expiry bonds, its fourth failed auction this month.

CEE MARKETS SNAPSH AT 1549 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.755 25.838 +0.32 4.86% 0 5 % Hungary 307.80 308.41 +0.20 0.33% forint 00 50 % Polish zloty 4.2355 4.2525 +0.40 3.98%

%

Romanian leu 4.5835 4.5877 +0.09 -1.06%

%

Croatian 7.5045 7.5095 +0.07 0.67% kuna % Serbian 119.15 119.35 +0.17 3.52% 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 1053.4 1053.0 +0.03 +14.3 2 8 % 0% Budapest 39009. 38894. +0.29 +21.8 02 88 % 9% Warsaw 2542.6 2528.1 +0.57 +30.5 9 6 % 3% Bucharest 8035.4 8034.9 +0.01 +13.4 1 6 % 1% Ljubljana 814.28 816.75 -0.30% +13.4

7%

Zagreb 1852.3 1862.4 -0.54% -7.14% 7 8 Belgrade 730.90 727.24 +0.50 +1.89 % % Sofia 670.28 669.17 +0.17 +14.3 % 0%

BONDS

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

Republic

2-year 0.092 0.155 +083b +17bp ps s 5-year 0.479 -0.013 +081b +0bps

ps

10-year 1.362 -0.005 +097b +1bps

ps Poland

2-year 1.694 -0.011 +243b +0bps

ps

5-year 2.642 -0.024 +297b -1bps

ps

10-year 3.284 -0.028 +289b -2bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.78 0.94 1.07 0

IBOR=>

Hungary <BU 0.07 0.09 0.12 0.03

BOR=>

Poland <WI 1.772 1.806 1.866 1.73

BOR=>

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

(Reporting by Sandor Peto Additional reporting by Agnieszka Barteczko and Bartosz Chmielewski in Warsaw Editing by Gareth Jones)