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CEE MARKETS-Crown hits 7-week low as CPI fall may mean fewer rate hikes

* Czech inflation falls more than forecast in February

* Crown dips, investors wonder if data change rate hike prospects

* CEE price pressures eased, will rise later -analysts

* Hungary trade surplus strong, forint firmest since Feb. 20

(Adds comments from Czech central bank, analyst) BUDAPEST/PRAGUE, March 9 (Reuters) - The crown dipped to a seven-week low against the euro on Friday as investors mulled if a retreat in Czech inflation would make the central bank (CNB) slow its interest rate hikes. Czech annual inflation fell to 1.8 percent in February, below analysts' 2 percent forecast, from 2.2 percent in January.

The decline added to signs that price pressures in Central Europe are lower than expected, despite a regionwide surge in wages and consumption. Poland's central bank lowered its inflation forecasts on Wednesday and surprised investors with strongly dovish comments.

The CNB said prices of all consumer price basket items were below its expectation, and the new figures represented dowwards risk relative to its forecasts. Even before the bank's comments, KBC analysts said the CNB was likely to hike interest rates slower now. "Now we see only one more 25 bps rate hike until the end of this year (compared to two before)," they said in a note. The crown traded at 25.46 against the euro at 1341 GMT, off the lows which it reached after the figures at 25.483, but weaker by 0.15 percent from Thursday. Austrian-based Erste Bank, a volatile stock listed in Prague, shed 1.1 percent, but Komercni Banka shares rose by 0.5 percent. Higher interest rates open room for banks to increase their revenues. Czech inflation was pushed lower mainly by food and beverage prices that retreated after a jump in items including eggs and butter in 2017, Erste analyst Jiri Polansky said in a note, before the CNB's comments. But the underlying economic story has not changed, he said. "Tight conditions in the labor market, solid domestic demand, rise in administered prices and higher food and oil prices...are the most important pro-inflationary factors." A Reuters poll of analysts earlier this week projected that the crown could spearhead a firming of the main regional currencies in the coming year, driven by healthy growth and continuing monetary tightening. Other Czech figures underpinned on Friday that wage growth remains robust, while the country's January trade surplus was hardly more than half of analysts' forecasts. Hungary's January trade surplus, meanwhile, was higher than expected. This year's surplus will be only marginally below 8.1 billion euros in 2017 despite robust domestic demand, Takarekbank analyst Gergely Suppan said in a note. The forint was steady at 311.79 versus the euro.

CEE SNAPSHOT AT MARKETS 1441 CET

CURRENCI ES

Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.4600 25.4220 -0.15% +0.32% crown > Hungary <EURHUF= 311.7900 311.8000 +0.00% -0.28% forint > Polish <EURPLN= 4.2020 4.2039 +0.05% -0.61% zloty > Romanian <EURRON= 4.6577 4.6550 -0.06% +0.47% leu > Croatian <EURHRK= 7.4250 7.4375 +0.17% +0.07% kuna > Serbian <EURRSD= 117.9400 117.9400 +0.00% +0.47% dinar > Note: calculated from 1800 CET

daily change

Latest Previous Daily Change close change in 2018 Prague 1116.03 1118.170 -0.19% +3.51%

0

Budapest 38444.09 38670.63 -0.59% -2.37% Warsaw 2337.44 2322.09 +0.66% -5.03% Bucharest 8484.71 8471.65 +0.15% +9.43% Ljubljana <.SBITOP 820.07 816.84 +0.40% +1.70% > Zagreb 1857.73 1852.99 +0.26% +0.81% Belgrade <.BELEX1 741.06 735.21 +0.80% -2.47%

5>

Sofia 675.69 682.94 -1.06% -0.26%

BONDS

Yield Yield Spread Daily (bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 0.8200 0.0510 +137bps +5bps

R>

5-year <CZ5YT=R 1.2850 -0.0020 +125bps -2bps

R>

10-year <CZ10YT= 1.9330 -0.0070 +128bps -3bps

RR Poland

2-year <PL2YT=R 1.5840 0.0070 +213bps +0bps

R>

5-year <PL5YT=R 2.5010 0.0310 +247bps +2bps

R>

10-year <PL10YT= 3.3020 0.0610 +265bps +4bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep 0.96 1.06 1.22 0.90

<PRIBOR=

>

Hungary 0.09 0.13 0.20 0.03 Poland 1.73 1.75 1.81 1.71

Note: FRA are for ask prices quotes

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(Reporting by Sandor Peto Editing by Mark Heinrich)