CEE MARKETS-Hungarian yields fall on growth fears, receding CPI concern

* Hungarian bond yields resume rise to multi-month low

* Global growth concerns push CEE debt yields lower

* Currencies remain supported as dollar loses ground

BUDAPEST, Dec 4 (Reuters) - Hungarian government bond yields fell to their mid-year levels on Tuesday as inflation concerns receded in Central Europe and fears of a global economic slowdown crept back. The region's main equities markets, tracking Asian and Western European peers, gave back part of the ground gained on Monday due to relief over a truce in the U.S.-China trade war. Regional currencies failed to benefit from a selling of the dollar, breaking a typical correlation of 2018, even though the zloty briefly touched a 2-month high against the euro at 4.2749 in early trade. "There are economic growth fears (globally)," one Budapest-based fixed income trader said. "We track core markets... and the U.S. market (long-term Treasury yields) are already pricing in future rate cuts there," the trader said. Hungarian government bond yields, after some rebound on Monday, fell again. They shed 5-8 basis points, with the 10-year paper trading at its lowest levels since early June, at 3.1 percent. It almost closed a gap with better-rated Poland, even though the corresponding Polish yield dipped 2-3 basis points, briefly dipping below the 3-percent psychological line. Monday's PMI manufacturing indices in the region fell, fueling expectations that its robustly growing economies will soon follow a slowdown in Western export markets. Figures released on Tuesday in the region showed a stronger than expected 6 percent annual rise in Czech gross wages and a rise in Romania's annual producer price index to 6.3 percent in October from 5.6 percent in September. But a decline in global crude oil prices has helped dampen inflation fears in the region, fueling a decline in government bond yields, market participants said. That cuts the immediate pressure on central banks to tighten policy, but regional currencies remain relatively strong as the dollar buying seen earlier this year does not continue, market participants said. Seasonal factors also help, Santander Bank analysts said. "This month is statistically positive for the zloty. In the last 19 years, EURPLN rose in the final month of the year only five times, last time in 2014," they said in a note. Looking ahead, an inversion in parts of the U.S. Treasury yield curve can cause a headache if worries arise that regional interest rates will be too low to track a reversal in U.S. rates years from now. "That could cause worries in emerging markets, but that is a too far prospect to open positions on," the Budapest trader said. "It is not carved in stone that the U.S. curve will become inverted. True, it looks quite strange at the moment."

CEE SNAPSHOT AT MARKETS 1023 CET

CURRENCI ES

Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.9170 25.9030 -0.05% -1.45% crown > Hungary <EURHUF= 322.5500 322.6600 +0.03% -3.61% forint > Polish <EURPLN= 4.2759 4.2765 +0.01% -2.33% zloty > Romanian <EURRON= 4.6500 4.6487 -0.03% +0.64% leu > Croatian <EURHRK= 7.4015 7.3915 -0.14% +0.39% kuna > Serbian <EURRSD= 118.0000 118.1700 +0.14% +0.42% dinar > Note: calculated from 1800 CET

daily change

Latest Previous Daily Change close change in 2018 Prague 1070.53 1073.650 -0.29% -0.71%

0

Budapest 40609.71 40579.82 +0.07% +3.13% Warsaw 2321.33 2329.37 -0.35% -5.68% Bucharest 8738.60 8751.93 -0.15% +12.70% Ljubljana <.SBITOP 813.92 818.85 -0.60% +0.94% > Zagreb 1732.81 1732.12 +0.04% -5.97% Belgrade <.BELEX1 742.65 743.86 -0.16% -2.26%

5>

Sofia 599.89 599.10 +0.13% -11.45%

BONDS

Yield Yield Spread Daily (bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 1.7180 0.1090 +233bps +12bps

R>

5-year <CZ5YT=R 1.8140 0.0190 +207bps +3bps

R>

10-year <CZ10YT= 2.0790 0.0170 +179bps +4bps

RR> Poland

2-year <PL2YT=R 1.5420 -0.0110 +215bps +0bps

R>

5-year <PL5YT=R 2.4650 -0.0150 +272bps +0bps

R>

10-year <PL10YT= 3.0310 -0.0010 +274bps +2bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep 2.18 2.30 2.37 2.02

<PRIBOR=

>

Hungary 0.30 0.51 0.80 0.13 Poland 1.75 1.76 1.80 1.72

Note: FRA are for ask prices quotes

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(Reporting by Sandor Peto Editing by Keith Weir)