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CEE MARKETS-Leu eases despite rate hike, dollar rebound weighs

* Leu rises, then retreats after rate hike

* Romanian c.bank comments on leu weaken currency

* Dollar buying pushes CEE currencies lower

BUDAPEST/BUCHAREST, Jan 9 (Reuters) - The leu eased on Tuesday despite the Romanian central bank's (NBR) interest rate hike, along with other Central European currencies which were knocked lower by the dollar's rebound in global markets. The NBR delivered its first rate hike in a decade on Tuesday to fight inflation which it said could rise above its target in the next months. Raising its benchmark rate by a quarter point to 2 percent, the NBR became the second central bank in the region after its Czech counterpart to start normalising its record-low interest rates. The hike initially helped the leu and flattened the curve of Romanian government bond yields. The currency retreated after NBR Governor Mugur Isarescu said a range of 5-6 percentage points for its moves would be sustainable, without giving more details. "But he did not specify what was the reference point," one Bucharest-based dealer said. "So, in light of these we could believe that there's some space for more downward move towards 4.67 (against the euro), maybe." The leu eased 0.2 to 4.6575 against the euro by 0959 GMT, off Friday's two-month highs of 4.6066 and drifting closer to record lows set in the last session of 2017 at 4.68. A 29 percent annual rise in Romania's January-November trade deficit underpinned concerns that the economy is overheating. Neighbouring Hungary's own trade figures, meanwhile, showed a bigger-than-expected surplus. The good trade and current account performance is seen supporting the forint this year despite the Hungarian central bank's continuing monetary stimulus to the economy. But on Tuesday the Hungarian currency eased by 0.1 percent against the euro, while the zloty shed 0.2 percent. The region's currencies had a strong start to the year as investors sold the dollar in global markets, with the zloty rising to a 2-and-1/2-year high on Friday. But Central European units have retreated this week as the dollar regained some strength. "The negative correlation with the dollar continues to work," one Budapest-based currency trader said. "Friday's U.S. CPI data will be very important." While the Fed and the European Central Bank are seen moving towards tighter policies in the coming years, not all Central European monetary authorities are on board. After mild December inflation figures, Polish central bank Governor Adam Glapinski is expected to reiterate after a meeting of the bank on Wednesday that rates could remain unchanged all this year. A Reuters poll of analysts showed last week that the Czech crown could gain 2.4 percent against the euro this year, and the forint and the zloty about one percent.

CEE SNAPSHOT AT MARKETS 1059 CET

CURRENCI ES

Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.5200 25.5500 +0.12% +0.09% crown > Hungary <EURHUF= 309.2500 308.8600 -0.13% +0.54% forint > Polish <EURPLN= 4.1777 4.1704 -0.17% -0.03%

zloty

Romanian <EURRON= 4.6575 4.6500 -0.16% +0.48% leu > Croatian <EURHRK= 7.4490 7.4425 -0.09% -0.25% kuna > Serbian <EURRSD= 118.4500 118.5400 +0.08% +0.04% dinar > Note: calculated from 1800 CET

daily change

Latest Previous Daily Change close change in 2018 Prague 1107.10 1108.920 -0.16% +2.68%

0

Budapest 40078.03 40104.03 -0.06% +1.78% Warsaw 2553.06 2548.61 +0.17% +3.73% Bucharest 8015.31 7982.75 +0.41% +3.37% Ljubljana <.SBITOP 810.93 807.89 +0.38% +0.56% > Zagreb 1859.19 1861.57 -0.13% +0.89% Belgrade <.BELEX1 765.25 767.70 -0.32% +0.72%

5>

Sofia 690.31 688.88 +0.21% +1.90%

BONDS

Yield Yield Spread Daily (bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 0.6860 0.0760 +130bps +8bps

R>

5-year <CZ5YT=R 0.9590 0.0660 +117bps +6bps

R>

10-year <CZ10YT= 1.6730 0.0260 +124bps +2bps

RR> Poland

2-year <PL2YT=R 1.6340 0.0200 +225bps +2bps

R>

5-year <PL5YT=R 2.5410 0.0160 +275bps +1bps

R>

10-year <PL10YT= 3.2730 0.0360 +284bps +3bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Hungary 0.03 0.06 0.10 0.00 Poland 1.75 1.78 1.88 1.72

Note: FRA are for ask prices quotes

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(Reporting by Sandor Peto; Editing by Raissa Kasolowsky)