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CEE MARKETS-Hungarian bond prices ease ahead of auction, currencies weaken

* Dollar bulls send CEE currencies, equities lower

* Politics an uncertainty factor for Hungarian bonds

* Hungary's auction seen drawing sufficient demand

* Warsaw shares hit 6-month low, partly driven by banks

BUDAPEST, March 1 (Reuters) - Hungarian debt prices and the forint eased along with Central European currencies on Thursday as international sentiment soured and political uncertainty increased ahead of Hungary's April parliamentary election. February PMI manufacturing indices released in Budapest, Prague and Warsaw showed some retreat from high January levels, but still indicated healthy economic growth. Hungarian government bond yields rose 1-2 basis points, with 10-year paper trading at 2.6 percent ahead of bond auctions later in the day, in contrast with a 3 basis point drop in corresponding Bunds and a 4 basis point decline in Poland to 3.2 percent. The National Bank of Hungary continues to support demand for long-term government paper through a tender of cheap interest rate swaps to be held after the bond auction. But many investors prefer to buy the dollar on expectations of a faster rise in U.S. interest rates, while Italy's weekend election and a party vote on Germany's government coalition pose risks to the euro. "The international market sentiment has become more uncertain and that weighs on currencies (and equities) in the region," said Orsolya Nyeste, Budapest-based analyst of Erste group. "I still do not have any concern over the auction demand... with the central bank supporting it," one Budapest-based fixed income trader said. Domestic politics is also a factor that may have worsened sentiment, the trader said. Prime Minister Viktor Orban's ruling Fidesz party lost the mayor's seat in its stronghold southern city of Hodmezovasarhely in a surprise by-election result on Sunday, ahead of the parliamentary election on April 8. Fidesz has a firm lead in opinion polls, but the government may spend more now to ensure victory, the trader said. The prospect of a faster rise in global interest rates made the forint a regional underperformer in the past weeks as Hungary's central bank is regarded as dovish, and it reaffirmed its loose policy stance on Tuesday. The forint has shed about one percent against the euro so far this year. On Thursday it weakened by less than 0.1 percent, but trading around 314 it stays near one-and-1/2-year lows beyond 315.26. If the dollar remains buoyant, the forint may ease past 315, but Hungary's strong trade surplus will prevent a big weakening, dealers and analysts said. Regional equities mostly eased further, tracking Asian and Western European peers and Wall Street. Warsaw's bluechip index dropped 1.5 percent. The index of Warsaw-listed bank stocks eased 1.9 percent, continuing to retreat from January's record highs despite strong fourth-quarter results from the sector.

CEE SNAPSHOT AT MARKETS 1041 CET

CURRENCI ES

Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.4150 25.4070 -0.03% +0.50% crown > Hungary <EURHUF= 313.9400 313.7700 -0.05% -0.96% forint > Polish <EURPLN= 4.1841 4.1740 -0.24% -0.19% zloty > Romanian <EURRON= 4.6575 4.6557 -0.04% +0.48% leu > Croatian <EURHRK= 7.4530 7.4505 -0.03% -0.30% kuna > Serbian <EURRSD= 117.8600 117.9300 +0.06% +0.54% dinar > Note: calculated from 1800 CET

daily change

Latest Previous Daily Change close change in 2018 Prague 1117.67 1120.470 -0.25% +3.66%

0

Budapest 38292.28 38112.00 +0.47% -2.76% Warsaw 2329.40 2364.32 -1.48% -5.36% Bucharest 8423.72 8452.41 -0.34% +8.64% Ljubljana <.SBITOP 813.73 817.82 -0.50% +0.91% > Zagreb 1854.81 1839.46 +0.83% +0.65% Belgrade <.BELEX1 750.72 751.04 -0.04% -1.20%

5>

Sofia 686.47 686.43 +0.01% +1.33%

BONDS

Yield Yield Spread Daily (bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 0.6860 0.0500 +123bps +7bps

R>

5-year <CZ5YT=R 1.2500 -0.0140 +124bps +0bps

R>

10-year <CZ10YT= 1.9250 0.0000 +129bps +3bps

RR> Poland

2-year <PL2YT=R 1.6410 -0.0200 +219bps +0bps

R>

5-year <PL5YT=R 2.5870 -0.0170 +258bps +0bps

R>

10-year <PL10YT= 3.3180 -0.0320 +268bps -1bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep 0.98 1.09 1.25 0.91

<PRIBOR=

>

Hungary 0.08 0.11 0.19 0.02 Poland 1.75 1.77 1.84 1.72

Note: FRA are for ask prices quotes

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(Reporting by Sandor Peto; Editing by Janet Lawrence)