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CEE MARKETS-Forint, Hungarian bonds ease ahead of expected CPI rise

1301 GMT, staying near its weakest levels since November, set

* Forint eases though Hungary's industrial output surges

* Hungarian CPI data due on Thursday seen showing further rise

* Hungarian government bonds miss firming of European peers

* Serbian seen keeping rates on hold

(Adds underperformance of Hungarian government bonds, new analyst comment) BUDAPEST/BELGRADE, May 8 (Reuters) - Hungary's forint traded near 5-month lows on Wednesday as robust industrial output data did not change market expectations that the central bank (NBH) will not rush into further monetary tightening despite a continued rise in inflation. The forint eased a shade to 324.2 against the euro at 324.85 last week. Hungary's 10-year government bond yield was fixed at 3.33 percent, up 1 basis point, returning to its highest level in almost six months, a day before the government's bi-weekly bond auctions. Poland's corresponding yield, meanwhile, dropped further by 4 basis points to 2.93 percent as investors bought government bonds in Europe and the United States amid worries over economic growth. Hungary's April inflation data due on Thursday are expected to show a rise in the annual inflation to around 4 percent, the top of the NBH's 2-4 percent target range. The forint weakened more than 3 percent in the past seven weeks as the NBH increased its overnight deposit rate slightly at its March meeting but dropped its guidance for gradual monetary tightening. Surging wages have been boosting domestic demand in Central Europe, fuelling a rise in consumer prices, but an economic slowdown and persistent low interest rates in the euro zone have dampened inflation pressure. Data released by Hungary on Wednesday showed that industrial output surged by an annual 8 percent in March, exceeding all forecasts, but the forint failed to benefit from the figures.

"Pressure on the forint is not easing as the NBH insists on its loose monetary policy despite the rising inflation backdrop," Erste analysts said in a note. Germany also released better-than-expected March industrial output data on Wednesday, but the outlook remained gloomy.

The data and some rebound in the euro did not provide support for the forint, but the zloty firmed a shade to 4.289. Elsewhere, the dinar firmed slightly ahead of the Serbian central bank's Thursday meeting where it is expected to keep its benchmark rate on hold at 3 percent as inflation remains within its target despite robust economic growth.

The bank has been buying the dinar in the market this year to stem its strengthening, partly driven by increased domestic spending around Easter by Serbians who work abroad. "Also there were several issuances of dinar-indexed T-bonds which boosted demand," one dealer said, adding that the currency could weaken to around 118.5 soon. Czech domestic markets were closed for a national holiday.

CEE SNAPSHOT ATMARKETS 1501 CET

CURRENCI ES

Latest Previous Daily Changebid close change in 2019Czech <EURCZK= 25.7160 25.7410 +0.10% -0.03%crown >Hungary <EURHUF= 324.2000 324.1200 -0.02% -0.96%forint >Polish <EURPLN= 4.2909 4.2919 +0.02% -0.03%zloty >Romanian <EURRON= 4.7590 4.7565 -0.05% -2.21%leu >Croatian <EURHRK= 7.4085 7.4095 +0.01% +0.02%kuna >Serbian <EURRSD= 117.8800 117.9700 +0.08% +0.36%dinar >Note: calculated from 1800 CET

daily change

Latest Previous Daily Changeclose change in 2019Budapest 41379.08 41084.57 +0.72% +5.72%Warsaw 2225.19 2233.80 -0.39% -2.26%Bucharest 8395.90 8419.18 -0.28% +13.71%Ljubljana <.SBITOP 874.91 881.04 -0.70% +8.78%>Zagreb 1838.53 1838.28 +0.01% +5.13%Belgrade <.BELEX1 735.03 736.38 -0.18% -3.50%

5>

Sofia 568.50 567.70 +0.14% -4.37%

BONDS

Yield Yield Spread Daily(bid) change vs Bund change

in Poland

2-year <PL2YT=R 1.6790 0.0040 +230bps +1bps

R>

5-year <PL5YT=R 2.2980 -0.0260 +277bps -2bps

R>

10-year <PL10YT= 2.9480 -0.0370 +300bps -2bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep 2.25 2.26 2.26 2.21

<PRIBOR=

>

Hungary 0.38 0.54 0.72 0.16Poland 1.74 1.75 1.78 1.72

Note: FRA are for ask prices quotes

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(Reporting by Sandor Peto; Editing by Andrew Cawthorne and Frances Kerry)