CEE MARKETS 2-Currencies rally on AIG news; zloty leads

                                
 (Adds details, fixed income)
                                
 PRAGUE, Sept 17 (Reuters) - Poland's zloty jumped against
the euro on Wednesday, helped by its government setting a goal
to meet euro zone entry criteria, and led a regional rally as a
bailout for U.S. insurance giant AIG soothed markets.
                                
The zloty <EURPLN=> gained 1.7 percent by 0744 GMT to trade
at 3.25 to the euro, up from 3.383 at Tuesday's domestic close
after Poland's government confirmed a target date of 2011 for
qualifying to adopt the common currency.
                                
 "We assume that both improvement in global sentiment and a
straight declaration on nominal convergence (on the euro) is
likely to outweigh (the strengthening dollar)," analysts at BPH
bank in Warsaw wrote in a morning note.
                                
 The euro is the region's main reference currency, and a
stronger dollar versus the common currency often hits sentiment
on central European currencies.
                                
 Late on Tuesday the Polish government and central bank
agreed 2011 should be the year when Poland meets the criteria
and gets the go-ahead from the European Commission to adopt the
euro, although it is unlikely to join the euro zone until 2012.
  (For details please double click on [ID:nLG141184])
                                
 Polish five-year and 10-year notes opened stronger after the
declaration, while improved global sentiment after two days of 
turmoil boosted Hungarian government bonds, with yields dropping
about 10-12 basis points across the curve.
                                
 Sentiment also picked up after U.S. authorities patched
together an emergency $85 billion rescue of American
International Group <AIG.N> to stave off bankruptcy.
                                
 Markets have been in a tailspin this week, hit by news on
Monday of U.S. investment bank Lehman Brothers Holdings <LEH.N>
filing for bankruptcy protection, which raised risk aversion and
hit regional currencies.
                                
 On Wednesday, Hungary's forint <EURHUF=> gained back some
recent losses, edging up 0.1 percent to 242.0 per euro, while
the Czech crown <EURCZK=>, an outperformer so far this week,
added 0.1 percent to 23.98 versus the euro.
                                
 "It's hard to set a firm direction but the overnight AIG
bailout is good news," a Budapest-based currency dealer said.
"For the time being, everybody seems to be licking their wounds
but the forint may post modest gains today on the back of this
news."
                                
 In other trade, Romania's leu <EURRON=> rose 0.3 percent to
3.628 per euro, while the Croatian kuna <EURHRK=> edged down 0.1
percent to 7.11 per euro and Serbia's dinar <EURRSD=> was flat
at 76.21 against the euro.
                                
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2008 
Czech crown      <EURCZK=>   23.983   23.995  +0.05%   +9.49%
Polish zloty     <EURPLN=>    3.325    3.383  +1.71%   +7.65%
Hungarian forint <EURHUF=>  242.020  242.200  +0.07%   +4.28%
Croatian kuna    <EURHRK=>    7.109    7.100  -0.13%   +2.97%
Romanian leu     <EURRON=>    3.628    3.637  +0.25%   -1.34%
Serbian dinar    <EURRSD=>   76.210   76.210   0%      +3.24%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR   +3 basis points to  7bps over bmk*
5-yr T-bond   CZ5YT=RR    -2 basis points to  +7bps over bmk*
10-yr T-bond   CZ9YT=RR    0 basis points to  +22bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -4 basis points to  +250bps over bmk*
5-yr T-bond   PL5YT=RR    -3 basis points to  +217bps over bmk*
10-yr T-bond PL10YT=RR    -1 basis points to  +183bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -5 basis points to  +544bps over bmk*
5-yr T-bond   HU5YT=RR    -12 basis points to  +508bps over bmk*
10-yr T-bond   HU10YT=RR  -12 basis points to  +403bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0944 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news [EMRG]
Spot FX rates
Eastern Europe spot FX <EEFX=>    Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=>       Latin America spot FX <LATAMFX=>
Other news and reports  
World central bank news [CEN]  Economic Data Guide <ECONGUIDE> 
Official rates [GLOBAL/INT]  Emerging Diary [EMRG/DIARY] 
Top events [M/DIARY]  Diaries [DIARY] Diaries Index [IND/DIARY] 
 (Reporting by Reuters bureaus, writing by Jason Hovet; editing
by David Stamp)