CEE MARKETS-Polish bond yield hits seven-month low, PMIs remain strong

* Polish, Czech, Hungarian PMIs show continuing strong growth

* Polish 10-year bond yield at 7-month low

* Polish debt fell, expected low supply supports bonds

* Hungarian assets steady or firmer ahead of Sunday's election

BUDAPEST, April 3 (Reuters) - Poland's 10-year government bond yield fell to a seven-month low as investors expected little debt supply and low inflation in coming months, despite strong manufacturing indexes from Warsaw, Prague and Budapest. The Polish central bank is not expected to shift to a more hawkish policy, which would weigh on bond prices, as robust economic growth has not yet raised widespread concerns over inflation in Poland, unlike for other central banks in the region. Poland's statistical office said the government's budget deficit fell to 1.5 percent of economic output in 2017 from 2.3 percent in 2016. Its debt shrank to 50.6 percent from 54.2 percent of GDP. Budget figures for January and February showed a surplus and the finance ministry has reduced the supply of government bond issues planned for the second quarter of the year. The yield on Poland's 10-year bond traded below 3.16 percent, down 10 basis points from the last close on March 29. Its Hungarian equivalent was flat at 2.45 percent. Poland's bond supply will be limited, "with still-high demand from banks and non-bank financial institutions, and a large inflow of cash to the market - more than 15 billion zlotys from treasury bond redemptions and coupon payments," BZ WBK said in a note. While Hungarian and some Polish central bankers do not expect a rise in record-low interest rates, or a big rise in inflation, for years, Romania's central bank is expected on Wednesday to deliver its third interest rate hike this year as it fights a surge in inflation boosted by surging net wages. The Czech central bank is also expected to continue to tighten interest rates later this year. March PMI manufacturing activity figures from the region confirmed on Tuesday that regional economies continue to expand. Regional currencies were steady or firmed marginally as global sentiment towards risk was fragile, also reflected by mixed movements in regional equities. The Czech crown traded at 25.359 against the euro, off a 1-1/2 month high of 25.295 touched in early trade. Budapest's main stock index rose 0.4 percent after an initial fall. Hungarian government bonds were little changed in thin trade, five days ahead of parliamentary elections. "Markets price in that there will be no government change and the government will get more than 50 percent (of parliament seats)," one Budapest-based fixed-income trader said. Opinion polls show a lead for Prime Minister Viktor Orban's conservative Fidesz party, but the fractured opposition could win in many constituencies if its voters choose the strongest challenger to the government candidate, increasing uncertainty over the outcome of the election.

CEE SNAPSHOT AT MARKETS 1123 CET

CURRENCI ES

Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.3590 25.3640 +0.02% +0.72% crown > Hungary <EURHUF= 312.5500 312.7000 +0.05% -0.52% forint > Polish <EURPLN= 4.2112 4.2114 +0.00% -0.83% zloty > Romanian <EURRON= 4.6595 4.6606 +0.02% +0.43% leu > Croatian <EURHRK= 7.4310 7.4321 +0.01% -0.01% kuna > Serbian <EURRSD= 118.0500 118.1800 +0.11% +0.38% dinar > Note: calculated from 1800 CET

daily change

Latest Previous Daily Change close change in 2018 Prague 1116.82 1123.890 -0.63% +3.59%

0

Budapest 37415.01 37258.90 +0.42% -4.98% Warsaw 2212.72 2210.38 +0.11% -10.10% Bucharest 8709.15 8769.26 -0.69% +12.32% Ljubljana <.SBITOP 823.84 817.45 +0.78% +2.17% > Zagreb 1793.50 1804.97 -0.64% -2.68% Belgrade <.BELEX1 745.56 745.51 +0.01% -1.87%

5>

Sofia 659.71 649.17 +1.62% -2.62%

BONDS

Yield Yield Spread Daily (bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 0.7900 0.0730 +138bps +6bps

R>

5-year <CZ5YT=R 1.2390 -0.0070 +134bps -1bps

R>

10-year <CZ10YT= 1.8440 -0.0180 +135bps -2bps

RR> Poland

2-year <PL2YT=R 1.5190 0.0160 +210bps +1bps

R>

5-year <PL5YT=R 2.3700 0.0160 +248bps +2bps

R>

10-year <PL10YT= 3.1650 -0.0030 +267bps +0bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep 0.96 1.06 1.22 0.90

<PRIBOR=

>

Hungary 0.07 0.10 0.18 0.03 Poland 1.73 1.74 1.76 1.70

Note: FRA are for ask prices quotes

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(Additional reporting by Radu Marinas in Bucharest Editing by David Holmes)