CEE MARKETS 4-FX give up gains, Romania eyes Eurobond

                                
 * FX fall on weaker footing
                                
 * CPI data keeps rate cuts in view
                                
 * Hungary bonds stronger on short end, Romania eyes Eurobond
                                
 
 (Adds Romania Eurobond plans, quotes)
                                
 By Jason Hovet and Marius Zaharia
                                
 PRAGUE/BUCHAREST, Aug 11 (Reuters) - The Polish zloty and
the Hungarian forint led a retreat in central European
currencies on Tuesday, as investors booked recent gains, while
slowing inflation kept the region's units on weaker ground.
                                
 The zloty <EURPLN=> fell 1.4 percent by 1331 GMT and the
forint <EURHUF=> was down 1.2 percent. The Czech crown <EURCZK=>
bid down 0.4 percent from Monday's domestic close, while
Romania's leu <EURRON=> was a touch lower.
                                
 "This is a natural retreat after a rally we had for the past
month and a half," one Budapest-based dealer said. "I'd say this
is cutting back on the euphoria and taking some profits rather
than a change in sentiment."
                                
 Investors absorbed inflation data in Hungary and Romania
that offered some leeway for central banks to keep rates low as
the region comes to grips with faltering economies.
[ID:nLB668566]
                                
 The region's CPI figures followed a sharp deceleration in
Czech inflation, revealed by data on Monday. Poland's data are
due on Wednesday and analysts see the figure above the central
bank's target, which could put a pause on policy easing.
                                
 "The general picture that we are seeing is a tendency for
CPI to decelerate ... and that leaves room open for further rate
cuts in the region," said Danske Bank's Lars Christensen.
                                
 "So in general the trend is for softer currencies but at the
moment global risk sentiment is overshadowing that."
                                
 A survey showed on Tuesday business sentiment among foreign
companies operating in emerging Europe improved for the first
time since early 2007 [ID:nL796400].
                                
 
                                
 EUROBONDS
                                
 A recent pick up in risk appetite has allowed Hungary and
Poland to successfully tap international markets last month, a
move which has helped currencies and domestic debt markets as it
proved financing conditions have improved in the region.
                                
 Romania is next in line, with a deputy finance minister
saying the country may issue a Eurobond anytime from September
[ID:nLB710455]. He also said the junk-rated country could issue
its first 10-year bond this year over the next two months.
                                
 Risk premiums for Hungary and Romania fell dramatically
since those countries secured IMF-EU help. A downgrade by
Standard & Poor's for Estonia and Latvia late on Monday
[ID:nN10485167] spiked up costs of insuring Baltic debt, but had
no impact on central Europe.
                                
 "It is the huge EU/IMF/EBRD/WB loan/transfer packages for
eastern EU countries ... that are doing the trick," Cheuvreux
said in a note.
                                
 Improved sentiment on the international markets, coupled
with the need to plug widening budget deficits across the region
may lure governments into issuing more foreign debt.
                                
 "Positive market dynamics might be preparing grounds for
another spate of EM sovereign and quasi-sovereign issuances,"
Commerzbank said in a note. "We believe Turkey and Hungary might
be interesting candidates for further taps on their respective
Eurobond curves."
                                
 Bonds in the Czech Republic and Hungary were stronger on the
short end, with investors in the latter pricing in a roughly 50
basis point cut for August's rate meeting, dealers said.
                                
 Hungary awaits a large expiry on Wednesday and bond auctions
on Thursday <HUISSUE>.
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  25.778   25.675   -0.4%    +3.78%
Polish zloty     <EURPLN=>   4.181    4.123   -1.39%   -1.58%
Hungarian forint <EURHUF=> 273      269.87    -1.15%   -3.46%
Croatian kuna    <EURHRK=>   7.322    7.332   +0.14%   +0.59%
Romanian leu     <EURRON=>   4.213    4.207   -0.14%   -4.71%
Serbian dinar    <EURRSD=>  93.586   93.297   -0.31%   -4.39%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +29 basis points to  121bps over bmk*
4-yr T-bond   CZ4YT=RR    -11 basis points to  +116bps over bmk*
8-yr T-bond   CZ8YT=RR   +14 basis points to  +248bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -7 basis points to  +659bps over bmk*
5-yr T-bond   HU5YT=RR    0 basis points to  +597bps over bmk*
10-yr T-bond   HU10YT=RR +1 basis points to  +519bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1631 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
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 (Reporting by Reuters bureaus, writing by Jason Hovet and
Marius Zaharia; Editing by Andy Bruce)