CEE MARKETS 3-Currencies trim losses but remain under pressure

(Adds quote, updates prices)

* Euro zone meeting, debate of possible Spain bailout watched

* Hungary's forint gives back some of Friday gains

* Romanian leu hits 2-month low, market eyes central bank

By Sam Cage and Jana Mlcochova

BUCHAREST/PRAGUE, Oct 8 (Reuters) - Emerging European currencies trimmed some of the morning's losses on Monday, as investors showed willingness to take on risk, but stayed under pressure before a euro zone ministerial meeting where a potential bailout of Spain may be debated.

Dealers said investors were prepared to seek out higher returns through emerging markets after the European Central Bank (ECB) said it could buy bonds to support struggling euro zone members and the U.S. Federal Reserve last month announced a third round of quantitative easing.

This meant, for example, that the Czech crown could quickly recover some of its losses once a Japanese bank, which sold the currency early in the day, ceased to do so.

"We can expect a changeable mood regarding the euro due to the upcoming summit but overall the situation plays in favour of emerging markets, mainly after promises of action by the ECB and the Fed boosted risk appetite and investors seek higher yields," a Prague-based dealer said.

Hungary's forint

pared some of its early losses to trade at 283.81 per euro by 1313 GMT, or 0.45 percent down on the day. It had earlier weakened as much as 0.7 percent on the day to 284.55.

The unit had led emerging European currencies lower on Monday, giving back some of the previous session's sharp gains, due to persistent questions over an international financing deal for Hungary.

A trader said that in line with the forint's easing today, bond yields also edged a few basis points higher, after a significant drop on Friday.

Budapest scrapped a disputed tax on its central bank and unveiled a swathe of new measures on Friday to keep its deficit under control, removing an obstacle to an International Monetary Fund (IMF) deal and sending the forint up more than 1 percent.

"No wonder we are at these levels now, it's a correction," a dealer said. "If we look at monetary policy, what we are having is a rate-cut cycle, and there is still uncertainty over the IMF deal. That story is not over yet."

The cost of insuring Hungary's debt against a default for five years

sank to around 340 basis points, its lowest level since August 2011, but markets will remain on edge until a deal is actually signed.

"A fault confessed is half redressed," Commerzbank said in a note. "Until the EU and IMF give the all clear, risk continues to concentrate on the upper end in EUR-HUF (euro forint)."

Elsewhere, assets were pressured by a bearish mood on global stock markets after the World Bank cut growth forecasts for Asia and underlined concerns over the global economic outlook.

The euro came under pressure ahead of a meeting on Monday of euro zone finance ministers as the bloc's permanent bailout fund is launched. Spain was expected to top the agenda at the gathering in Luxembourg as uncertainty persists over when the country may ask for a bailout.

Stocks fell across central Europe, led by a 0.9 percent drop in Budapest

. The Czech crown

also pared losses, trading 0.3 percent weaker on the day by 1320 GMT after weakening as much as 0.5 percent earlier. Data showed a bigger-than-expected fall in industrial output and raised expectations of a fourth straight quarter of recession.

"The data published today can hardly be interpreted as good news for the Czech crown," said Raromir Jac, analyst at Generali PPF Asset Management.

Dealers said they saw Bank of Tokyo Mitsubishi selling the unit early in the morning and once this stopped, the crown rose off its lows.

LEU LOWS Romania's leu

hit a new two-month low before regaining some ground to trade broadly flat at 4.572 per euro, as traders tested the level at which the central bank would step in to support the currency.

The leu is at its lowest since the summer, when it hit all-time lows on political uncertainty caused by a failed attempt by the government to remove the president from office, which also raised doubts over Romania's 5 billion euro IMF backstop deal.

A parliamentary election is due in December and campaigning and post-vote bargaining could again raise doubts over the country's adherence to its international commitments.

"Fears of central bank intervention may have subsided," said ING economist Mihai Tantaru. "It could soften further, eyeing 4.60 per euro in a matter of days."

Poland's zloty

fell 0.3 percent, with markets weighing the prospect of monetary policy easing after a central banker said he may vote for an interest rate cut in November.

--------------------------MARKET SNAPSHOT--------------------

Currency Latest Previous Local Local close currency currency change change today in 2012 Czech crown

24.936 24.826 -0.44% +2.44%

Polish zloty

4.077 4.067 -0.25% +9.51%

Hungarian forint

283.4 282.3 -0.39% +11.01%

Croatian kuna 7.478 7.478 0% +0.51% Romanian leu

4.567 4.566 -0.02% -5.39%

Serbian dinar 114.71 114.87 +0.14% -6.76% Yield Spreads Czech treasury bonds 2-yr T-bond CZ2YT=RR +4 basis points to 47bps over bmk* 7-yr T-bond CZ6YT=RR +4 basis points to +77bps over bmk* 10-yr T-bond CZ10YT=RR +2 basis points to +88bps over bmk* Polish treasury bonds

2-yr T-bond PL2YT=RR +2 basis points to +397bps over bmk*

5-yr T-bond PL5YT=RR +3 basis points to +363bps over bmk*

10-yr T-bond PL10YT=RR +3 basis points to +317bps over bmk*

Hungarian treasury bonds 3-yr T-bond HU3YT=RR +9 basis points to +641bps over bmk* 5-yr T-bond HU5YT=RR +12 basis points to +611bps over bmk*

10-yr T-bond HU10YT=RR +4 basis points to +567bps over bmk*

*Benchmark is German bond equivalent.

All data taken from Reuters at 1553 CET.

Currency percent change calculated from the daily domestic

close at 1600 GMT.

(Editing by Catherine Evans and Anthony Barker)

((sam.cage@thomsonreuters.com)(+40 0 21 305 5266)(Reuters Messaging: sam.cage.thomsonreuters.com@reuters.net))