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CEE MARKETS-Currencies ease on Polish, Czech rate setter comments

* Zloty leads fx easing as CPI rise is no worry to central bank

* Czech central bank chief sees 25-bps hikes every six months

* Crown touches 3-week low, forint plumbs new one-year low

BUDAPEST/PRAGUE, Dec 6 (Reuters) - Central European currencies eased against the euro on Wednesday amid some disappointment that a continuing rise in inflation has not led to more hawkish central bank rhetoric in the region. The zloty led the weakening, shedding 0.2 percent, to trade at 4.2148 at 1050 GMT. Polish government bond prices extended the week's gains as yields dropped further by 1-2 basis points, with 10-year papers trading at 3.2595 percent. The Polish central bank (NBP) said after its meeting on Tuesday that core inflation remained low and a rise in volatile food and energy prices was behind a rise in inflation to a 5-year high of 2.5 percent by November. "(The bank) did not give investors reasons to expect interest rate hikes soon," ING Bank Slaski analysts said in a note, adding that some investors had expected more hawkish comments after the past weeks' robust domestic economic data. The zloty, however, stays close to the 4.2 per euro line against the euro and 6-month-high territories beyond it. It could strengthen in the next months as the economy powers ahead, fuelling inflation and strengthening the hawkish camp with the NBP, Raiffeisen said in a note. October industrial output and retail sales figures from Budapest and Prague, respectively, underpinned on Wednesday that economic growth remains strong in the region, even though the Czech annual rise of 6.3 percent was below forecasts. The crown and the forint eased despite the figures. The Czech unit shed 0.1 percent against the euro, while the forint eased 0.2 percent and touched its weakest level this year. The Czech central bank (CNB) may raise its main interest rate by a quarter of a percentage point each half-year, Governor Jiri Rusnok said on Tuesday. Some investors interpreted his comments as less hawkish than expected, analyst Wolfgang Ernst said in the same Raiffeisen note. The bank fights against rising inflation by strengthening the crown, and it has raised interest rates twice since August, while it also has to avoid disappointing foreign investors who sit on a huge pile of long crown positions. Ernst said the bank could come up with more hawkish comments at its meeting on Dec. 21 to support the crown. The currency touched 3-week lows at 25.695 against the euro, even though with a 5-percent gain since 2016 it is still one of the best performing currencies in the world this year. ING's chief economist in Prague, Jakub Seidler said a rise in the CNB's 0.5-percent main rate to slightly above 1 percent One Prague-based fixed income trader said markets had priced in two 25 basis point rate hikes for the next 9 months.

CEE MARKETS SNAPSH AT 1150 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 25.693 25.658 -0.14% 5.11% 0 0 Hungary 314.65 314.06 -0.19% -1.85% forint 00 00 Polish zloty 4.2148 4.2065 -0.20% 4.49% Romanian leu 4.6325 4.6308 -0.04% -2.10% Croatian 7.5450 7.5495 +0.06 0.13% kuna % Serbian 119.35 119.44 +0.08 3.35% 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 1054.4 1060.8 -0.61% +14.4 7 9 2% Budapest 37770. 37558. +0.56 +18.0 04 76 % 2% Warsaw 2401.3 2407.7 -0.27% +23.2 0 2 8% Bucharest 7740.9 7720.1 +0.27 +9.26 6 7 % % Ljubljana 777.31 784.89 -0.97% +8.32

%

Zagreb 1851.4 1856.1 -0.26% -7.19% 1 9 Belgrade 742.76 742.36 +0.05 +3.54 % % Sofia 665.36 668.19 -0.42% +13.4

6% BONDS

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

Republic

2-year -0.017 0 +072b +1bps

ps

5-year 0.774 0 +114b +1bps

ps

10-year 1.407 -0.14 +110b -13bps

ps Poland

2-year 1.666 0.005 +241b +1bps

ps

5-year 2.657 0 +302b +1bps

ps

10-year 3.274 -0.011 +296b +0bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 1 1.17 1.3 0

IBOR=>

Hungary <BU 0.075 0.11 0.145 0.03

BOR=>

Poland <WI 1.772 1.816 1.912 1.73

BOR=>

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

(Additional reporting by Marcin Goettig in Warsaw; Editing by Richard Balmforth)