CEE MARKETS 3-Zloty jumps as Poland holds rates

(Adds Polish rate decision, market reaction)

* Central bank unexpectedly keeps main rate at 4.75 pct

* Zloty jumps, other currencies in region mixed

* Polish c.bank to hold press conference at 1400 GMT

By Jason Hovet and Krisztina Than

PRAGUE/BUDAPEST, Oct 3 (Reuters) - The zloty jumped half a percent on Wednesday after the Polish central bank held interest rates, surprising analysts who had expected a cut to counter a slowdown in the region's largest economy.

The Czech and Hungarian central banks have trimmed their main interest rates in past weeks to help their recession-hit economies, and most analysts polled by Reuters thought Poland, which has a stronger economy, would follow suit.

Weakening growth and rate cuts to go with it have taken the steam out of a rally that has made the Polish zloty and Hungarian forint two of the world's top performing currencies this year.

The zloty

surged after Poland kept rates at 4.75 percent, rising 0.4 percent from Tuesday's close to bid at 4.091 to the euro by 1150 GMT. Other central European currencies were mixed, with the Czech crown

flat and the forint up 0.2 percent.

Analysts said while the decision was at variance with most expectations, the bank probably had one eye on an upcoming inflation report which could shed light on price risks in the economy.

The bank will hold a news conference about its decision at 1400 GMT.

"For now ...we expect rates still to be on hold in November until there is more meaningful evidence of inflation coming down into target," said Peter Attard Montalto at Nomura.

"That said, the chances of a cut are meaningful at that November meeting, particularly if monthly output and retail data remains soft."

Montalto said markets would shift rate cuts forward to next month and he expected the zloty to continue "to trade well".

The region's currencies have slipped by between 0.5 and 3 percent since mid-September following a rally early last month on fresh stimulus moves from U.S. and euro zone central banks.

Dealers expect more weakening in the final quarter of 2012.

Global growth concerns have rattled markets, while the Czech Republic and Hungary have slid into recession and Poland's growth is slowing quickly.


Central Europe's rally this year, with 8-10 percent gains for the zloty and forint, has been fuelled by a hunt for relatively safe investments beyond the crisis-ridden euro zone.

The region's bonds have been holding up, as evidenced this week by strong demand for 1.75 billion euros of Polish 12-year bonds and the sale of Czech 10-year euro-denominated paper at record low yields


Hungary, central Europe's most indebted country, is waiting to go to foreign debt markets while it is in loan talks with the International Monetary Fund and European Union.

The IMF has questioned the government's growth outlook, saying it is too rosy.

Newspaper Magyar Nemzet said on Wednesday that ministers planned to raise their 2013 deficit target to 2.8 percent of economic output from 2.2 percent in an effort to avoid drastic budget cuts.

Currency Latest Previous Local Local close currency currency change change today in 2011 Czech crown

25,019 25,011 -0.03% +2.1%

Polish zloty 4,091 4,107 +0.39% +9.13% Hungarian forint 285,61 286,16 +0.19% +10.15% Croatian kuna 7,459 7,444 -0.2% +0.76% Romanian leu 4,533 4,525 -0.18% -4.68% Serbian dinar 115,03 115,56 +0.46% -7.02%

All data taken from Reuters at 1350 CET.Currency percent change calculated from the daily domestic close at 1600 GMT.For related news and prices, click on the codes in brackets: All emerging market news

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(Reporting by Reuters bureaus, writing by Jason Hovet/Krisztina Than; editing by Jane Baird, John Stonestreet)

((jason.hovet@thomsonreuters.com)(+420 224 190 476)(Reuters Messaging: jason.hovet.thomsonreuters.com@reuters.net))