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UPDATE 2-Hungary "not far" from agreement with IMF - PM Orban

* Further progress expected after IMF meetings in Tokyo

* Forint climbs, CDS, bond yields lower as markets expect deal

* Still no date for next round of talks - Hungary's negotiator with IMF

(Adds minister's remarks, market reaction)

By Gergely Szakacs

BUDAPEST, Oct 12 (Reuters) - Hungary is "not far" from a financial backstop agreement with the IMF, Prime Minister Viktor Orban said on Friday, sending the volatile forint to a one-month high against the euro.

Orban's representative in the negotiations, however, dampened hopes for an imminent breakthrough in the stop-start talks on a multi-billion euro loan that Budapest first requested almost a year ago.

Central Europe's most indebted nation, which has not tapped international debt markets this year, needs a financing deal to curb its high borrowing costs and rebuild market confidence hurt by years of unorthodox economic policies.

"There is a good chance. We are not far from a good agreement," Orban told radio station MR1-Kossuth in an interview when asked about the prospects of striking a deal.

Orban said further progress in the talks could be made after the International Monetary Fund concludes its annual meeting being held in Tokyo.

The forint scaled a one-month high in early trade on Friday, while the country's 5- and 10-year government bond yields came down to two-year lows.

But Orban's minister in charge of the talks, Mihaly Varga, told Hungarian news agency MTI at the IMF meeting that no date had been set yet for the next round of talks, after Budapest unveiled its latest concessions for a loan last week.

Orban said pressure on Hungary to secure a deal at all costs had abated and confidence in the country had strengthened.

Some market participants believe Hungary is playing for time in the talks.

Varga was quoted by MTI as saying Hungary needed a safety net due to its weak growth outlook, projected by the IMF at just 0.8 percent in 2013 after a recession this year, one of the weakest performances in central Europe.

He also said that if there was no fundamental change in global sentiment until the middle or end of next year, Hungary would need no external funding. He did not elaborate, but reiterated that any eurobond issue could only follow an IMF agreement.

Earlier this week Orban said whether Hungary would secure an agreement with the IMF and the European Union on a loan to bolster its shrinking economy would be determined by the first quarter of next year.

After preliminary talks in July, Hungary moved a step closer to a deal last week by abandoning a planned tax on its central bank and flagging new budget cuts worth 397 billion forints ($1.83 billion) next year to keep its deficit under control.

Market optimism that a deal may be near curbed yields on the government's "junk-rated" bonds below 7 percent, while the cost of insuring Hungary's debt against default fell to levels last seen in July 2011.

Fitch Ratings told Hungary on Wednesday that it should not try to go without IMF support. ($1 = 217.49 Hungarian forints)

(Reporting by Gergely Szakacs; Editing by Andrew Heavens and Hugh Lawson)

((gergely.szakacs@thomsonreuters.com)(+36 1 327 4748)(Reuters Messaging: gergely.szakacs.thomsonreuters.com@reuters.net))

Keywords: HUNGARY IMF/