CEE MARKETS-Forint, crown ease, monetary tightening bets are scaled back

* Forint retreats, central bank offers long-term swaps at auction

* Crown eases slightly, odds of Czech rate hike fell-analysts

* Polish, Romanian central banks seen holding interest rates

BUDAPEST, Feb 4 (Reuters) - The forint and the Czech crown eased slightly on Monday as investors were scaling back expectations for monetary tightening in the two countries. The forint traded at 317.78 against the euro at 1014 GMT, weaker by 0.2 percent from its previous close, even though it was off Friday's one-week low of 318.34. Fading expectations for U.S. interest rate hikes after Wednesday's Federal Reserve comments gave a boost to most Central European currencies. The forint hit an 8 and 1/2-month high near 315, but retreated on Friday in a correction. It weakened amid market rumours that central bank deputy governor Marton Nagy sounded less hawkish than earlier at a private meeting with investors in London. Officials of the bank were not immediately available for comment. In the middle of last month, the forint got a boost after Nagy said the bank could start to tighten policy once tax-adjusted core inflation reaches or exceeds 3 percent, after 2.9 percent in December. The bank is expected to start tightening by cutting the amount of liquidity provided to markets through its fx swaps. "No long-term swaps offered at the (weekly) auction would be consistent with that, but they did offer long-term swaps at Monday's auction," one Budapest-based currency dealer said. "They will not rush into tightening... we will see what their inflation report (due in March) shows," the dealer said. Hungary's January PMI manufacturing index released on Friday showed continuing economic growth, while Czech and Polish figures indicated that an economic slowdown in the euro zone could take its toll in Central Europe as well. Hungarian government bonds yields, after falling about 10 basis points on Friday, ticked higher by 1 basis point, tracking Bunds and U.S. Treasuries, with the 10-year Hungarian paper trading at 2.66 percent, still near 8-month lows. The Czech crown eased 0.1 percent to 25.72 versus the euro, while Poland's zloty firmed 0.2 percent to 4.2815. The crown has underperformed the forint and the zloty this year as comments from Czech central bankers made investors scale back expectations that the bank could continue to increase interest rates at its meeting on Feb. 7. "We do not expect the CNB to hike rates this week, as it would be reasonable to wait for more clarity on the development of the real economy, given the weak PMIs and gloomier outlook for the German economy," Erste analysts said in a note. The Polish and Romanian central banks are expected to keep their interest rates on hold at their meetings this week, on Wednesday and Thursday, respectively.

CEE SNAPSHOT AT MARKETS 1114 CET

CURRENCI ES

Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.7200 25.7030 -0.07% -0.05% crown > Hungary <EURHUF= 317.7800 317.2500 -0.17% +1.04% forint > Polish <EURPLN= 4.2815 4.2890 +0.18% +0.19% zloty > Romanian <EURRON= 4.7520 4.7530 +0.02% -2.06% leu > Croatian <EURHRK= 7.4160 7.4125 -0.05% -0.08% kuna > Serbian <EURRSD= 118.2900 118.4500 +0.14% +0.01% dinar > Note: calculated from 1800 CET

daily change

Latest Previous Daily Change close change in 2019 Prague 1050.09 1048.280 +0.17% +6.44%

0

Budapest 40868.43 40973.34 -0.26% +4.42% Warsaw 2406.67 2393.43 +0.55% +5.71% Bucharest 7115.70 7030.47 +1.21% -3.63% Ljubljana <.SBITOP 831.39 832.94 -0.19% +3.37% > Zagreb 1757.55 1760.03 -0.14% +0.50% Belgrade <.BELEX1 714.85 714.77 +0.01% -6.15%

5>

Sofia 578.27 583.98 -0.98% -2.72%

BONDS

Yield Yield Spread Daily (bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 1.7510 0.0340 +233bps +3bps

R>

5-year <CZ5YT=R 1.5720 0.0420 +191bps +3bps

R>

10-year <CZ10YT= 1.6950 0.0110 +153bps +1bps

RR> Poland

2-year <PL2YT=R 1.5200 -0.0850 +210bps -9bps

R>

5-year <PL5YT=R 2.2060 0.0280 +255bps +2bps

R>

10-year <PL10YT= 2.7600 0.0090 +259bps +1bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep 2.08 2.11 2.13 1.99

<PRIBOR=

>

Hungary 0.31 0.52 0.71 0.15 Poland 1.74 1.72 1.72 1.72

Note: FRA are for ask prices quotes

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(Reporting by Sandor Peto Editing by Keith Weir)