CEE MARKETS-Crown hits 7-week low on inflation dip surprise

* 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

BUDAPEST/PRAGUE, March 9 (Reuters) - The crown dipped to a seven-week low against the euro after Czech inflation retreated more in February than analyst forecasts, according to figures released on Friday. The drop in annual inflation to 1.8 percent from 2.2 percent adds to signs that consumer 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 crown fell to 25.483 against the euro, its weakest levels since the middle of January, before rebounding to 25.44 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. 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. After the inflation figures that weakened the crown, investors are awaiting the Czech central bank's reaction, said Lubos Kolarik, currency trader in Komercni Banka in Prague. "The question is, how will it be with the planned rate hikes in the coming months?" he said. "But it is just one number; I would not jump into conclusions." Hungary's January trade surplus was higher than expected. That may signal that 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 surplus has been key among factors that have buoyed the forint in recent years. The currency firmed 0.1 percent to 311.5, reaching its firmest level since Feb. 20. Fitch is unlikely to upgrade Hungary's credit rating in a review due late on Friday as it awaits policy announcements after the April 8 election, which the ruling Fidesz party is expected to win, Equilor brokerage said in a note. Moody's may upgrade the credit ratings of Serbia and Slovakia on Friday, Raiffeisen said in a note.



Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.4400 25.4220 -0.07% +0.40% crown > Hungary <EURHUF= 311.5000 311.8000 +0.10% -0.19% forint > Polish <EURPLN= 4.1952 4.2039 +0.21% -0.45% zloty > Romanian <EURRON= 4.6570 4.6550 -0.04% +0.49% leu > Croatian <EURHRK= 7.4360 7.4375 +0.02% -0.08% kuna > Serbian <EURRSD= 117.9100 117.9400 +0.03% +0.50% dinar > Note: calculated from 1800 CET

daily change

Latest Previous Daily Change close change in 2018 Prague 1116.51 1118.170 -0.15% +3.56%


Budapest 38572.97 38670.63 -0.25% -2.04% Warsaw 2304.62 2322.09 -0.75% -6.36% Bucharest 8475.81 8471.65 +0.05% +9.31% Ljubljana <.SBITOP 814.92 816.84 -0.24% +1.06% > Zagreb 1856.37 1852.99 +0.18% +0.73% Belgrade <.BELEX1 740.89 735.21 +0.77% -2.49%


Sofia 679.08 682.94 -0.57% +0.24%


Yield Yield Spread Daily (bid) change vs Bund change


Czech spread


2-year <CZ2YT=R 0.8350 0.0660 +138bps +6bps


5-year <CZ5YT=R 1.2760 -0.0110 +124bps -3bps


10-year CZ10YT= 1.9430 0.0020 +130bps -2bps

RR> Poland

2-year <PL2YT=R 1.5800 0.0030 +213bps +0bps


5-year <PL5YT=R 2.5060 0.0360 +247bps +2bps


10-year <PL10YT= 3.2790 0.0380 +263bps +2bps




3x6 6x9 9x12 3M

interban k

Czech Rep 0.97 1.08 1.24 0.91



Hungary 0.07 0.10 0.18 0.02 Poland 1.74 1.76 1.83 1.71

Note: FRA are for ask prices quotes



(Reporting by Sandor Peto Editing by Mark Heinrich)