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CEE MARKETS-Political spat over leu weakens it near record lows

* Romanian PM slams central bank for letting leu weaken

* Romanian bond yields consolidate, but remain fragile

* Zloty and crown drift off highs, forint regains ground

BUDAPEST/BUCHAREST, Nov 24 (Reuters) - The leu eased to levels near record lows on Friday after Romanian Prime Minister Mihai Tudose criticised the central bank (NBR) for not intervening to stop the currency's slide. The leu, which traded at 4.655 against the euro at 1108 GMT, set new record lows at 4.6585 earlier this week. It weakened in the past weeks due to concern over budget spending, a ballooning trade deficit, rising inflation, corruption cases and a controversial judiciary reform. It also got hit by a shift in the NBR's policy focus to market interest rates from the currency exchange rate which it had kept in relatively narrow ranges for years. Romania's 10-year government bond yield has risen about 180 basis points to 4.62 percent in the past 13 months in the European Union's fastest-growing economy, which recorded an 8.8 percent year-on-year output rise for the third quarter. Neighbouring Hungary's corresponding yield has declined about 160 basis points to 2.05 percent. The central bank there is not worried over inflation and is loosening monetary screws. Just two months ago, premier Tudose criticised the NBR for a rise in interbank interest rates amid a liquidity squeeze. The weakening of the leu was a result of the shift in focus in the NBR's policies on keeping market interest rates close to its benchmark rate, intended to control inflation more effectively. The leu and Romanian bonds stabilised on Friday after their steep weakening, but the friction between the government and the central bank creates "a very unfavourable reputation", one Budapest-based fixed income trader said. "It is hard to foresee the interest rate path in that overheated economy. It is not unsustainability, but the risks are priced in the form of risk premia," the trader added. One Bucharest-based dealer said Tudose's criticism was not surprising, adding that the leu was not expected to weaken past 4.7 against the euro before Christmas, but may reach new record lows. Other currencies in the region were also consolidating ahead of the weekend. The Czech crown, which reached a 4-and-1/2-year high late on Thursday, shed 0.1 percent, as did the zloty which drifted off Wednesday's four-month highs. The zloty also moved off Wednesday's 6-month highs against the forint, which regained some ground after a fall around Tuesday's meeting, where the Hungarian central bank announced new measure to push long-term interest rates lower. In equities markets, the shares of Romania's second-biggest bank, Banca Transylvania rose 1.4 percent after it said it had reached an agreement with Greece's Eurobank to buy its Romanian unit Bancpost.

CEE MARKETS SNAPSH AT 1208 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.440 25.423 -0.06% 6.16% 0 5 Hungary 312.20 312.37 +0.05 -1.08% forint 00 00 % Polish zloty 4.2110 4.2055 -0.13% 4.58% Romanian leu 4.6550 4.6526 -0.05% -2.58% Croatian 7.5610 7.5645 +0.05 -0.08% kuna % Serbian 119.40 119.39 -0.01% 3.31% 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 1051.7 1046.0 +0.55 +14.1 6 3 % 2% Budapest 39755. 39962. -0.52% +24.2 30 72 2% Warsaw 2491.9 2503.9 -0.48% +27.9 2 3 3% Bucharest 7799.9 7778.6 +0.27 +10.0 1 9 % 9% Ljubljana 781.55 781.69 -0.02% +8.91

%

Zagreb 1863.1 1865.6 -0.13% -6.60% 9 0 Belgrade 739.24 736.19 +0.41 +3.05 % % Sofia 667.13 667.91 -0.12% +13.7

6% BONDS

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

Republic

2-year 0.389 0.065 +108b +7bps

ps

5-year 0.991 0.039 +131b +3bps

ps

10-year 1.769 0.011 +141b -1bps

ps Poland

2-year 1.536 0.015 +223b +1bps

ps

5-year 2.562 0.033 +288b +2bps

ps

10-year 3.344 0.024 +298b +1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 1.05 1.23 1.37 0

IBOR=>

Hungary <BU 0.08 0.09 0.13 0.03

BOR=>

Poland <WI 1.79 1.8325 1.9125 1.73

BOR=>

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

(Reporting by Sandor Peto; Editing by Peter Graff)