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CEE MARKETS-Forint gains with central bank seen leaving rates unchanged

* Risk appetite returns as U.S.-China trade war fears ease

* Hungarian central bank seen holding rates at record lows

* Romania bucks bonds firming after big Feb budget deficit

BUDAPEST, March 27 (Reuters) - The forint joined in the gains for most Central European assets, driven by a global rise in risk appetite, even though Hungary's central bank is expected to reaffirm its loose monetary policy at its meeting on Tuesday. Reports of behind-the-scene talks between the United States and China to avert a trade war boosted risk appetite globally. For now, investors are shrugging off a planned joint action states, to expel Russian diplomats, in response to the poisoning of a former Russian double agent in England. Warsaw led a rise of equities, with its blue-chip index gaining 1.4 percent by 0911 GMT, driven by financial services. The zloty gained 0.2 percent against the euro, leading regional currencies, which have been under pressure in the past two months from global market jitters and a retreat in inflation in most of the region. A Polish auction of government bonds is expected to draw robust demand on Tuesday, particularly because the Ministry of Finance lowered its limit for the sale to 3 billion zloty from 5 billion. "Let us remind you that during the previous sale in February the reported demand amounted to over PLN 13 billion with PLN 4 billion in sales," Bank Millennium said in a note. A Serbian five-year bond auction could also see good demand, partly due to expectation for further interest rate cuts by the central bank in Belgrade, a Raiffeisen note said. Hungarian government bond yields dropped 1 to 3 basis points before the central bank's meeting. The bank is expected to keep its base and overnight deposit rates on hold and issue new inflation and economic forecasts. Romania's central bank is expected to raise rates again next week after a surge in wages boosted inflation. The yield on Romanian two-year government bonds was bid higher by 4 basis points at 2.63 percent on Tuesday. Yields rose after the finance ministry reported late on Monday a deficit of 0.6 percent of economic output for February, even though the deterioration in the figures had been expected . The impact was offset by offset by the government's meeting borrowing target for March despite fluctuation in demand at its auctions, Raiffeisen analysts Nicolae Covrig said.

CEE SNAPSHOT AT MARKETS 1011 CET

CURRENCI ES

Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.4350 25.4700 +0.14% +0.42% crown > Hungary <EURHUF= 312.4500 312.8100 +0.12% -0.49% forint > Polish <EURPLN= 4.2125 4.2215 +0.21% -0.86% zloty > Romanian <EURRON= 4.6510 4.6520 +0.02% +0.62% leu > Croatian <EURHRK= 7.4405 7.4425 +0.03% -0.14% kuna > Serbian <EURRSD= 118.5500 118.6600 +0.09% -0.04% dinar > Note: calculated from 1800 CET

daily change

Latest Previous Daily Change close change in 2018 Prague 1117.15 1110.400 +0.61% +3.62%

0

Budapest 37549.85 37087.05 +1.25% -4.64% Warsaw 2271.23 2240.65 +1.36% -7.72% Bucharest 8768.60 8722.84 +0.52% +13.09% Ljubljana <.SBITOP 822.08 826.98 -0.59% +1.95% > Zagreb 1821.95 1817.36 +0.25% -1.14% Belgrade <.BELEX1 746.78 748.78 -0.27% -1.71%

5>

Sofia 656.50 653.82 +0.41% -3.09%

BONDS

Yield Yield Spread Daily (bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 0.8560 0.0960 +145bps +10bps

R>

5-year <CZ5YT=R 1.2990 -0.0030 +137bps +0bps

R>

10-year <CZ10YT= 1.9360 0.0120 +142bps +2bps

RR> Poland

2-year <PL2YT=R 1.5270 -0.0190 +212bps -1bps

R>

5-year <PL5YT=R 2.3810 -0.0130 +245bps -1bps

R>

10-year <PL10YT= 3.2220 -0.0020 +270bps +0bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep 0.96 1.07 1.23 0.90

<PRIBOR=

>

Hungary 0.07 0.10 0.18 0.03 Poland 1.73 1.74 1.77 1.70

Note: FRA are for ask prices quotes

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(Additional reporting by Luiza Ilie in Bucharest/Warsaw editorial; editing by Larry King)