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CEE MARKETS-Crown holds gains into rate meeting, stocks up

PRAGUE, Nov 7 (Reuters) - The Czech crown held onto gains on Thursday as the country's central bank met and was likely to hold fire on interest rates despite a continuing debate over a possible hike, while stock markets in the region were boosted by better global sentiment. The crown was near its strongest levels in four months but stuck to the weak side of the psychological 25.50 per euro barrier, with analysts expecting stable rates. The Czech central bank is one of the few in Europe still debating a rate hike even as the European Central Bank and U.S. Federal Reserve have already starting easing policy to safeguard their economies. Central Europe's economies have maintained solid growth despite a slowdown in key euro zone trading partners like Germany, boosted by strong domestic demand that is allowing rate setters to hold off on joining the rush to loosen policy. Poland's central bank governor said on Wednesday he expected stable interest rates until his term ends in 2022 as the bank's policy council left borrowing costs unchanged. Romania also held fire as policymakers balance inflation at the upper end of the target and a potential firming of the leu currency should they raise interest rates. The Czechs are also balancing inflation above its midpoint target with high uncertainty from external risks like global trade wars and Britain's departure from the EU. "As nothing is acutely pushing the bank to raise rates quickly, rates can stay unchanged this time," CSOB said. Markets and analysts see chances of rate stability into next year but are split on the direction after that. Rates markets in recent weeks have priced out some chances of a cut over the next year. The crown and Polish zloty both edged up less than 0.1% to 25.506 and 4.264 respectively to the euro in morning trade. The Romanian leu was steady at 4.761 and Hungary's forint dropped 0.2%. A Reuters poll on Thursday showed analysts see currencies in the region mostly flat to weaker over the next year.

"(The zloty) stabilised, but in our view a correction after the recent appreciation... is still more probable than a return to (firming)," Santander said in a note. Stock markets fared better, gaining up to half a percent as China signalled a 'phase 1' trade deal with the United States was close to being sealed.

CEE MARKETS SNAPSHOT AT 1132

CET CURRENCIES

Latest Previous Daily Changebid close change in 2019EURCZK= Czech 25.5060 25.5130 +0.03%+0.79%

crown

EURHUF= Hungary 332.6000 331.9000 -0.21%

-3.46% forint

EURPLN= Polish 4.2640 4.2660 +0.05%+0.60%

zloty

EURRON= Romanian 4.7605 4.7612 +0.01%

-2.24% leu

EURHRK= Croatian 7.4310 7.4355 +0.06%

-0.28% kuna

EURRSD= Serbian 117.3000 117.4100 +0.09%+0.85%

dinar

Note: calculated from 1800daily CET

change

Latest Previous Daily Changeclose change in 2019.PX Prague 1076.76 1073.7800 +0.28%+9.14%.BUX Budapest 43466.27 43291.61 +0.40%+11.06%.WIG20 Warsaw 2268.81 2255.34 +0.60%

-0.34%

.BETI Bucharest 9682.84 9687.66 -0.05%+31.14%.SBITOP Ljubljana 861.90 864.90 -0.35%+7.17%.CRBEX Zagreb 1973.79 1976.64 -0.14%+12.86%.BELEX15 Belgrade 748.75 750.15 -0.19%

-1.70%

.SOFIX Sofia 557.87 557.83 +0.01%

-6.16% BONDS

Yield Yield Spread Daily(bid) change vs Bund change inCzech spread

Republic

CZ2YT=RR 2-year 1.2540 0.0100 +187bp

-1bps s

CZ5YT=RR 5-year 1.1160 -0.0150 +169bp

-4bps s

CZ10YT=RR 10-year 1.5070 0.0820 +181bp+6bps

s Poland

PL2YT=RR 2-year 1.3890 -0.0190 +201bp

-4bps s

PL5YT=RR 5-year 1.7720 0.0100 +234bp

-2bps s

PL10YT=RR 10-year 2.0430 0.0100 +234bp

-2bps s

FORWARD RATE AGREEMENT3x6 6x9 9x12 3M

interbank

Czech Rep 2.23 2.22 2.16 2.18Hungary 0.27 0.33 0.37 0.19Poland 1.73 1.71 1.69 1.71

Note: FRA are for ask prices quotes

(Reporting by Jason Hovet in Prague and Alicja Ptak; Editing by Kirsten Donovan)