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CEE MARKETS-Currencies firm, Czech short-term bonds draw tepid demand

* Strong Polish economic data expected

* Currencies hover at peaks

* Moody's may improve Hungary's rating this week-trader

* Politics, budget fears keep lid on Romanian assets

(Adds Czech bond auction) BUDAPEST, Oct 18 (Reuters) - The zloty and the Czech crown extended their gains on Wednesday before a batch of Polish economic figures which are expected to show continued robust economic growth in the region. The crown, which firmed 0.2 percent to 25.73 by 1032 GMT, was also boosted by expectations that the Czech central bank will increase interest rates further. Out of the bonds offered by the Czech government at its auction on Wednesday, it did not sell zero-coupon papers at all, "With CNB hikes looming people are not interested in short bonds at these levels," a dealer said. The crown shrugged off concerns that the likely election victory of ANO party at Czech elections over the weekend could lead to drawn-out coalition talks, Goldman Sachs said in a note.

"Domestic financial markets are typically resilient to Czech political events, given the Czech Republic's strong fiscal position, sound institutions and independent central bank," it added. Polish and Czech current account data released this week and recent government budget figures have confirmed that most of the region's main economies remain well-balanced, analysts said. The Polish figures due at 1200 GMT are expected to show strong industrial output and retail sales growth in September. The zloty firmed 0.1 percent to 4.2312 against the euro, though it was slightly off Tuesday's three-month highs. Polish government bonds eased, reflecting losses in euro zone markets, as investors awaited the figures which, if strong, could fuel expectations of Polish central bank policy tightening next year. "The long end might be particularly sensitive," BZ WBK analysts said in a note. Central bank policies have been diverging in the region in the past months. The Czechs, with the lowest inflation target, started to lift interest rates in August, while the Hungarian bank has eased further. The forint still reached 5-week highs versus the euro this week, trading on the firm side of the key psychological line of 310. "Moody's could lift the outlook of Hungary's debt rating (in its review) to positive on Friday, and based on Hungarian economic indicators, an upgrade cannot be ruled out either," one Budapest-based fixed income trader said. Regional central bankers also European Central Bank rate setters and any hawkish guidance from the ECB's Oct 26 meeting could reduce appreciation pressure on regional currencies.

CEE MARKETS SNAPSH AT 1232 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.730 25.784 +0.21 4.96% 0 5 % Hungary 308.32 308.23 -0.03% 0.16% forint 00 00 Polish zloty 4.2312 4.2358 +0.11 4.08%

%

Romanian leu 4.5848 4.5840 -0.02% -1.09% Croatian 7.5060 7.5075 +0.02 0.65% kuna % Serbian 119.13 119.14 +0.01 3.54% 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 1057.1 1055.9 +0.11 +14.7 2 9 % 0% Budapest 39011. 38909. +0.26 +21.9 81 78 % 0% Warsaw 2520.2 2514.3 +0.23 +29.3 6 6 % 8% Bucharest 8053.8 8063.8 -0.12% +13.6 7 0 7% Ljubljana 807.55 811.10 -0.44% +12.5

4%

Zagreb 1847.3 1847.0 +0.02 -7.39% 6 8 % Belgrade 725.83 730.39 -0.62% +1.18

%

Sofia 669.74 671.11 -0.20% +14.2

1% BONDS

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

Republic

2-year 0.19 -0.04 +091b -5bps

ps

5-year 0.636 0.1 +096b +8bps

ps

10-year 1.41 0 +103b -2bps

ps Poland

2-year 1.709 0.015 +243b +1bps

ps

5-year 2.661 0.017 +298b +0bps

ps

10-year 3.314 0.029 +293b +1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.81 0.98 1.12 0

IBOR=>

Hungary <BU 0.07 0.1 0.15 0.03

BOR=>

Poland <WI 1.772 1.812 1.877 1.73

BOR=>

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

(Additional reporting by Jason Hovet in Prague; Editing by Raissa Kasolowsky)