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CEE MARKETS-Assets mostly weaker due trade tensions, forint slips on dovish c.bank

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BUDAPEST, May 29 (Reuters) - Emerging European assets were mostly weaker in early trade on Wednesday due to concerns about trade tensions between the United States and China, with the Hungarian forint slipping after the central bank maintained a dovish stance. Tuesday's decision by the National Bank of Hungary (NBH) to keep all interest rates on hold was in line with expectations, but some investors were looking for hawkish signs in its post-meeting statement which did not materialize. The forint briefly eased to a new nine-month low of 327.60 to the euro in early trade. By 0923 GMT it regained some ground to trade at 327.05, flat from late Tuesday, but still hovering near its 9-month lows. "The NBH did not change any monetary policy parameter or guidance yesterday -- rather, it gave a relaxed view of inflation while reiterating that inflation control remains its sole objective," Commerzbank analysts said in a briefing note. "I expect a further weakening of the forint, as at this moment there is nothing really to support it," a currency dealer in Budapest said, adding that the forint could edge towards record lows near 330 to the euro in the coming period. Central Europe's most dovish central bank raised its overnight deposit rate by 10 basis points in March, halting nearly seven years of monetary easing in Hungary, after inflation rose near the top of its 2% to 4% target range. But the monetary authority said the hike was a one-off as an economic slowdown in the euro zone would eventually could curb inflation, and it has since kept rates on hold. Market players will be watching its June 25 meeting for potential policy moves, as the bank will discuss its fresh inflation forecasts then. "All in all, we continue to see a delayed normalization process with little desire from the NBH to tighten proactively despite clear and widespread inflation pressures," Morgan Stanley analysts said in a note to clients on Tuesday. Stock markets in Warsaw and Bucharest also traded weaker on Wednesday, with global trade war fears prevailing and weighing on sentiment. Budapest and Prague were in positive territory. Shares in Czech utility CEZ were up by about 1.4%. Company executives said on an analysts' call on Tuesday that proceeds from planned divestments of foreign assets -- part of a strategy to switch focus to the domestic market -- could go to an extraordinary dividend, along with cutting leverage and new investments in the Czech Republic.

CEE SNAPSHOT ATMARKETS 1011 CET

CURRENCI ES

Latest Previous Daily Changebid close change in 2019Czech 25.8560 25.8470 -0.03% -0.58%

crown

Hungary 327.5000 327.0500 -0.14% -1.96%

forint

Polish 4.3015 4.2952 -0.15% -0.28%

zloty

Romanian 4.7625 4.7615 -0.02% -2.28%

leu

Croatian 7.4250 7.4243 -0.01% -0.20%

kuna

Serbian 117.8400 117.9700 +0.11% +0.39%

dinar

Note: calculated from 1800 CET

daily change

Latest Previous Daily Changeclose change in 2019Prague 1038.78 1038.160 +0.06% +5.29%

0

Budapest 40388.07 40466.85 -0.19% +3.19%Warsaw 2170.15 2192.87 -1.04% -4.68%Bucharest 8431.03 8500.84 -0.82% +14.18%Ljubljana 876.56 878.40 -0.21% +8.99%Zagreb 1868.87 1869.39 -0.03% +6.87%Belgrade <.BELEX15 730.90 732.54 -0.22% -4.04%>Sofia 570.51 571.80 -0.23% -4.03%

BONDS

Yield Yield Spread Daily(bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=RR 1.7420 -0.0430 +239bps -4bps>5-year <CZ5YT=RR 1.7170 0.0620 +227bps +7bps>10-year <CZ10YT=R 1.7880 -0.0130 +195bps +0bps

R> Poland

2-year <PL2YT=RR 1.6530 -0.0030 +230bps +0bps>5-year <PL5YT=RR 2.1470 -0.0160 +270bps -1bps>10-year <PL10YT=R 2.7380 -0.0500 +290bps -4bps

R>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep < 2.19 2.15 2.10 2.19

PRIBOR=>

Hungary < 0.35 0.53 0.70 0.20

BUBOR=>

Poland < 1.74 1.75 1.75 1.72

WIBOR=> Note: FRA are for ask prices quotes

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(Reporting by Reuters buros Editing by Helen Popper)