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CEE MARKETS-Czech crown eases, shrugs off warning from c.bank's Rusnok

* Czech cbank chief sees overheating risks, but "no tragedy"

* Crown retreats in tandem with forint and leu

* Hungarian banks report highest profit since 2009 crisis

* Polish bank stocks hit new 2-and-1/2-year high

BUDAPEST, Nov 28 (Reuters) - The Czech crown eased slightly on Tuesday in tandem with other Central European currencies, despite a new warning from Czech central bank governor Jiri Rusnok that the economy was overheating. The crown and the Polish zloty, the best-performing currencies in the world against both the dollar and the euro this year, still have room to firm up due to expectations for monetary tightening, analysts said. The crown, trading at 25.43 against the euro, has firmed 6.2 percent, and the zloty 4.7 percent so far this year. "Increasing market speculation about a third (Czech) rate hike in December and altogether a longer rate hiking cycle are a main driver for CZK," Raiffeisen analyst Wolfgang Ernst said in a note. He added that the crown could reach a "fair" value around 25 Managing interest rate expectations is a delicate balancing act for the CNB. If expectations are too strong that could cause swings in the exchange rate, but the bank will also be keen not to disappoint foreign investors sitting on large long crown positions and betting on gains in the currency. Rusnok said the economy was showing signs of overheating, while he added that inflation at the upper end of the target was "no tragedy." He said risks were growing in the property market due to cheap lending. He said he was not decided yet on how to vote at the central bank's December meeting. The forint, the leu and the crown eased 0.1 percent against the euro by 0955 GMT. The leu, at 4.6405, stayed near record lows due to concerns over Romania's corruption-riven politics, a controversial judiciary reform and a rise in state spending and inflation. The forint has been weakened by further monetary loosening announced last week. The Hungarian central bank will launch big interest rate swap and mortgage note-buying programs next year to push long-term interest rates down more. "They want to prop up cheap fixed-rate mortgage lending... and all Hungarian debt yields got to record lows," one Budapest-based fixed income trader said. "U.S. 2-year yields have increased a lot to 1.75 percent... but the NBH looks able to keep 2- and 3-year yields low, near zero," the trader added. Despite the low interest rates, Hungary's banking sector recorded its highest profit since the 2009 global crisis in the January-September period. Polish banks also improved their performance. The index of Polish listed shares set a new 2-1/2-year high on Tuesday, while Warsaw's blue chip stock index shed half a percent, with a retreat of shares in Asia weighing on sentiment.

CEE MARKETS SNAPSH AT 1055 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.430 25.416 -0.06% 6.20% 0 0 Hungary 311.40 311.06 -0.11% -0.83% forint 00 00 Polish zloty 4.2078 4.2067 -0.03% 4.66% Romanian leu 4.6405 4.6390 -0.03% -2.27% Croatian 7.5550 7.5575 +0.03 0.00% kuna % Serbian 119.70 119.56 -0.12% 3.05% 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 1048.5 1049.8 -0.12% +13.7 8 1 8% Budapest 39276. 39424. -0.38% +22.7 13 29 3% Warsaw 2481.1 2497.1 -0.64% +27.3 8 5 8% Bucharest 7745.8 7737.6 +0.11 +9.33 1 4 % % Ljubljana 780.73 782.32 -0.20% +8.80

%

Zagreb 1863.6 1862.3 +0.07 -6.58% 4 6 % Belgrade 739.05 738.63 +0.06 +3.02 % % Sofia 667.08 666.01 +0.16 +13.7 % 5%

BONDS

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

Republic

2-year 0.448 0.138 +115b +14bp ps s 5-year 0.929 0.064 +128b +7bps

ps

10-year 1.713 -0.046 +138b -4bps

ps Poland

2-year 1.555 -0.013 +226b -2bps

ps

5-year 2.559 -0.011 +291b +0bps

ps

10-year 3.334 0.005 +300b +2bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 1.03 1.19 1.33 0

IBOR=>

Hungary <BU 0.08 0.09 0.13 0

BOR=>

Poland <WI 1.78 1.83 1.93 1.73

BOR=>

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

(Reporting by Sandor Peto; Editing by Hugh Lawson)