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CEE MARKETS-Forint rallies as data hits zloty and leu tests record low

Sandor Peto and Alicja Ptak

* Forint sets 7-month high vs euro, 6-1/2-month high vs zloty

* Forint buoyed by hawkish comments, weak data weigh on zloty

* Leu retests record low at 4.7 vs euro set in June 2018

* Government bond yields continue to rise faster than USTs

(Adds leu, which tested record lows and analyst comment) BUDAPEST/WARSAW, Jan 18 (Reuters) - The Hungarian forint hit a seven-month high against the euro on Friday and gained against the Polish zloty after data pointed to slower growth in Poland. The forint has rallied since Wednesday when Hungarian central bank (NBH) Deputy Governor Marton Nagy said monetary tightening could start if core inflation reached or exceeded 3 percent, the midpoint of the bank's target range. On Friday, the forint touched a 7-month high at 317.85 against the euro, the region's main reference currency. At 1333 GMT, it was half a percent higher than Thursday's close at 318.15, and up by almost 2 percent from a one-month low just before Nagy's comments. Its Central European peers eased. The leu retested record lows last reached in June 2018 at 4.7 versus the euro as the mood in Romanian markets remained poisoned by new taxes levied on banks' assets, which are linked to interbank interest rates. The Romanian central bank keeps the currency in a managed float, and investors watch the market for signs of intervention from the bank. "It remains to be seen if, at this level, we will have the first 'line in the sand' from the central bank, which so far has only smoothed the Romanian leu's weakening trend," ING analysts said in a morning note. Against the zloty, the forint reached a 6-1/2-month high, bid at 73.95. The Polish unit shed 0.1 percent against the euro after weaker-than-expected December industrial output, wages and producer price growth data. "The data on wages will reinforce the MPC's (central bank's) conviction that keeping rates stable is the right thing to do, so the weaker data strengthen the perspective of a long period of stable rates," Piotr Piekos, senior economist at Pekao SA, said. The figures reflect a slowdown from last year's 5 percent growth, but the economy remains too robust to justify a rate cut priced in by markets earlier this week, analysts said. Government bond yields in Warsaw, and also in Budapest and Prague, continued to track this week's rebound in U.S. and German yields, after weeks of decline which was helped by a fall in inflation across the region in the past months. The yield on Poland's 10-year bonds rose 4 basis points to 2.84 percent, a 9-day high, compared with a 1 basis point rise in the corresponding U.S. Treasury yield. Hungary's 10-year bonds traded at 2.91 percent, up 5 basis points, but off an early peak of 3 percent.

CEE SNAPSHOT ATMARKETS 1433 CET

CURRENCI ES

Latest Previous Daily Changebid close change in 2019Czech <EURCZK= 25.5860 25.5420 -0.17% +0.47%crown >Hungary <EURHUF= 318.1500 319.8500 +0.53% +0.92%forint >Polish <EURPLN= 4.2913 4.2890 -0.05% -0.04%zloty >Romanian <EURRON= 4.6990 4.6940 -0.11% -0.96%leu >Croatian <EURHRK= 7.4300 7.4265 -0.05% -0.27%kuna >Serbian <EURRSD= 118.3800 118.3100 -0.06% -0.07%dinar >Note: calculated from 1800 CET

daily change

Latest Previous Daily Changeclose change in 2019Prague 1016.94 1014.880 +0.20% +3.08%

0

Budapest 41031.37 41180.05 -0.36% +4.84%Warsaw 2367.26 2358.97 +0.35% +3.98%Bucharest 7285.06 7184.84 +1.39% -1.34%Ljubljana <.SBITOP 843.45 835.91 +0.90% +4.87%>Zagreb 1765.76 1756.57 +0.52% +0.97%Belgrade <.BELEX1 699.11 697.56 +0.22% -8.22%

5>

Sofia 567.24 566.77 +0.08% -4.58%

BONDS

Yield Yield Spread Daily(bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 1.8880 -0.0580 +248bps -6bps

R>

5-year <CZ5YT=R 1.7810 -0.0010 +209bps -2bps

R>

10-year <CZ10YT= 1.8750 0.0410 +162bps +3bps

RR> Poland

2-year <PL2YT=R 1.3900 -0.0020 +198bps +0bps

R>

5-year <PL5YT=R 2.2610 0.0390 +257bps +2bps

R>

10-year <PL10YT= 2.8560 0.0350 +260bps +2bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep 2.15 2.21 2.25 2.01

<PRIBOR=

>

Hungary 0.34 0.60 0.86 0.14Poland 1.73 1.73 1.73 1.72

Note: FRA are for ask prices quotes

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(Additional reporting by Anna Wlodarczak in Warsaw, Luiza Ilie and Radu Marinas in Bucharest; Editing by Alexander Smith and Mark Potter)