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CEE MARKETS-Currencies firm as Czechs add to upside CPI surprises

them, which is a risk, but inflation could stay inside the

* Crown firms after Jan CPI comes in at 2.5 pct vs 2.2 pct fcast

* Core inflation rise also continues to buoy the forint

* ECB says Romania's bank tax is a financial stability risk

BUDAPEST/PRAGUE, Feb 13 (Reuters) - Upside surprises in January inflation figures drove Central European currencies higher on Wednesday, after Czech annual inflation came in well above forecasts. The forint firmed 0.3 percent and the Czech crown 0.2 percent against the euro by 0929 GMT, while the leu and the zloty also gained some ground. Weak economic figures from the euro zone and the region put some pressure on regional currencies in past weeks, but they regained some ground this week, helped by local inflation data. Czech annual inflation jumped to 2.5 percent in January from 2 percent in December, well above a 2.2 percent forecast, and analysts said a rise in energy bills early this year could maintain upside inflation pressure. "The fact that inflation growth was pulled by the majority of basket items will certainly not escape the attention of the hawkish wing of the bank board," said Radomir Jac, chief economist, Generali Investments CEE. "The combination of higher inflation and a weaker crown will mean debate on hiking interest rates will stay on the table," he said. "I believe the CNB will leave rates unchanged in March, but a serious debate on a hike could be on the agenda at the beginning of May." Czech government bond yields rose. The 10-year yield rose by 2 basis points at 1.7 percent, compared with a 2 basis point drop in the corresponding Polish yield to 2.7 percent. The forint got a boost already on Tuesday, after Hungary's tax-adjusted annual core inflation reached 3 percent. That is the mid-point of the central bank target range and the threshold that central bank deputy governor Marton Nagy said last month would be a signal that the bank needs to start monetary tightening. Romanian figures released on Wednesday showed that annual inflation was flat at 3.3 percent. That was a tad above analysts' expectations, but it is unlikely to trigger action from the Romanian central bank which is deeply engaged in a row with the government over a new tax on banks' assets tied to interbank interest rates. The European Central Bank criticized the government over the tax on Wednesday, saying that it could have a material impact on financial stability. A new tax on telecoms companies may lead to price increases central bank's 1.5-3.5 percent target range this year, Erste analyst Dorina Ilasco said in a note. Romanian government bond yields were mostly steady after jitters since the government announced its 2019 tax plans in December as part of a budget based on economic growth assumptions that critics said were unrealistic.

CEE SNAPSHOT ATMARKETS 1029 CET

CURRENCI ES

Latest Previous Daily Changebid close change in 2019Czech <EURCZK= 25.8150 25.8670 +0.20% -0.42%crown >Hungary <EURHUF= 317.7000 318.5500 +0.27% +1.07%forint >Polish <EURPLN= 4.3283 4.3295 +0.03% -0.89%zloty >Romanian <EURRON= 4.7435 4.7481 +0.10% -1.89%leu >Croatian <EURHRK= 7.4030 7.4075 +0.06% +0.09%kuna >Serbian <EURRSD= 118.0500 118.1200 +0.06% +0.21%dinar >Note: calculated from 1800 CET

daily change

Latest Previous Daily Changeclose change in 2019Prague 1058.57 1057.320 +0.12% +7.30%

0

Budapest 40297.86 40488.09 -0.47% +2.96%Warsaw 2364.99 2370.99 -0.25% +3.88%Bucharest 7579.42 7523.83 +0.74% +2.65%Ljubljana <.SBITOP 827.57 833.24 -0.68% +2.90%>Zagreb 1753.49 1750.00 +0.20% +0.27%Belgrade <.BELEX1 707.98 707.54 +0.06% -7.05%

5>

Sofia 572.66 573.32 -0.12% -3.67%

BONDS

Yield Yield Spread Daily(bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 1.7770 0.0280 +234bps +2bps

R>

5-year <CZ5YT=R 1.6720 0.0700 +205bps +7bps

R>

10-year <CZ10YT= 1.7530 0.0430 +163bps +5bps

RR> Poland

2-year <PL2YT=R 1.5500 -0.1050 +212bps -11bps

R>

5-year <PL5YT=R 2.1750 -0.0150 +255bps -1bps

R>

10-year <PL10YT= 2.7190 -0.0110 +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 0.37 0.58 0.79 0.15Poland 1.74 1.73 1.73 1.72

Note: FRA are for ask prices quotes

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(Reporting by Sandor Peto; Editing by Andrew Cawthorne)