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CEE MARKETS-Currencies firm, strong data outweighs political risks

* Rate hike expectations continue to fuel Czech crown rally

* Coalition talks after Oct 20-21 vote may cause some retreat

* Zloty, forint hit multi-week highs

(Adds Polish economic data) BUDAPEST, Oct 17 (Reuters) - Central European currencies firmed on Tuesday, with strong economic data and expectations for more to come outweighing political concerns, including a Czech national election due at the weekend. The crown, the forint and the zloty firmed in tandem by 0.2 percent against the euro by 1327 GMT. The crown hit 4-year highs, helped by expectations for interest rate hikes by the Czech central bank (CNB). Czech forward rate agreements have fully priced in a 25 basis point increase in the CNB's main rate in the next three months, which it started to increase in August in the first central bank rate hike in the European Union since 2012. "The upcoming legislative election (20-21 October) and possibly difficult coalition forming thereafter could cause some (short) disruption in the appreciation trend," Raiffeisen analyst Wolfgang Ernst said in a note. Billionaire Andrej Babis's ANO party has a double-digit lead over its closest rival in opinion polls. When Babis was finance minister, "the overall economic standing of the country improved", but as he is also a divisive person, some crown retreat may be in prospect, Nordea analyst Natalia Kornela Setlak said in a note. "If Babis maintains his ambition to become the next Czech PM, the post-election government formation might take longer than usual, increasing political instability and possibly weakening the CZK slightly," she said. Three-month outright crown forwards were bid at 25.748, showing some firming from Tuesday's spot levels around 25.77. The zloty's firming gained momentum after figures showing a 6 percent annual rise in corporate wages in September confirmed strong growth in central Europe's largest economy. The Polish unit had drawn support on Monday from a narrower-than-expected August current account deficit. Industrial output and retail sales figures due on Wednesday could give the zloty a further lift, dealers and analysts said. Societe Generale, in a note published on Tuesday, recommended that investors sell the euro against the zloty despite tensions between Poland and the European Commission over Warsaw's reforms of the judiciary. "We see no ultimate risk of stringent penalties against the country, as allies such as Hungary and the Czech Republic are likely to oppose sanctions on Poland," the note said. The zloty touched a 3-month high and the forint a 5-week high against the euro. "The world is still awash in money, while the Fed and the ECB continue to drag their feet (over monetary tightening)," one Budapest-based trader said.

CEE MARKETS SNAPSH AT 1527 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.770 25.814 +0.17 4.80% 0 0 % Hungary 307.50 308.16 +0.21 0.43% forint 00 00 % Polish zloty 4.2250 4.2321 +0.17 4.23%

%

Romanian leu 4.5785 4.5840 +0.12 -0.95%

%

Croatian 7.5075 7.5055 -0.03% 0.63%

kuna

Serbian 119.20 119.08 -0.10% 3.48% 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 1057.8 1052.7 +0.49 +14.7 9 5 % 9% Budapest 39011. 39119. -0.28% +21.9 52 89 0% Warsaw 2532.7 2534.5 -0.07% +30.0 3 2 2% Bucharest 8063.8 8032.3 +0.39 +13.8 6 8 % 2% Ljubljana 811.10 814.28 -0.39% +13.0

3%

Zagreb 1847.0 1855.0 -0.44% -7.41% 1 9 Belgrade 730.39 730.90 -0.07% +1.81

%

Sofia 669.31 670.28 -0.14% +14.1

3% BONDS

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

Republic

2-year 0.173 0 +090b -1bps

ps

5-year 0.518 0.039 +085b +4bps

ps

10-year 1.403 0.037 +103b +4bps

ps Poland

2-year 1.699 0.01 +243b +0bps

ps

5-year 2.656 0.018 +299b +2bps

ps

10-year 3.294 0.017 +292b +2bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.79 0.97 1.1 0

IBOR=>

Hungary <BU 0.075 0.1 0.12 0.03

BOR=>

Poland <WI 1.77 1.82 1.885 1.73

BOR=>

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

(Additional reporting by Jason Hovet in Prague/ Marcin Goclowski and Bartosz Chmielewski in Warsaw; Editing by Gareth Jones)