CEE MARKETS 2-Forint up ahead of rate move, leu flat

                                
 * FX up, forint stronger ahead of rate decision
                                
 * Leu stuck in range after first round of elections
                                
 
  (Adds fixed income, detail)
                                
 By Dagmara Leszkowicz
                                
 WARSAW, Nov 23 (Reuters) - Hungary's forint edged higher
while bond yields lowered in early trade on Monday ahead of an
expected 50 basis point cut in interest rates later in the day.
                                
 Romania's leu <EURRON=> remained stuck around 4.28 to the
euro after the first round of a presidential election saw
incumbent Traian Basescu leading by a slim margin. A second and
final round of voting is scheduled for Dec. 6.
                                
 Romania's president has little say in the day-to-day running
of the country, but does nominate the next prime minister, who
will have to form a coalition cabinet, The previous government
collapsed in October, delaying much-needed IMF aid.
[ID:nGEE5AM04N]
                                
 In Hungary, the key interest rate stands at 7.00 percent
after the central bank delivered a cut of half a percentage
point at its last meeting in October.[ID:nLI234800]
                                
 "It is pretty clear that the bank will cut interest rates,
but the question is how they communicate the decision," said
Urlich Leuchtmann, head of FX analysts at Commerzbank.
                                
 "For the forint the key question is the timing of further
interest rate cuts."
                                
 The forint, which fell to a record low in March this year,
was the key concern of Hungary's central bank before it started
to cut interest rates.
                                
 But since then the currency has stabilised, helped by a
global return of risk appetite, and the market widely expects
the bank to loosen monetary policy further after Monday's
meeting.
                                
 At 0948 GMT, the forint <EURHUF=> was 0.4 up from the
previous close, trading at 267.35 to the euro.
                                
 Hungary's statistics office said on Monday retail sales fell
in September by 7.3 percent, but the data had little impact to
the forint.
                                
 
                                
 RATES FLAT?
                                
 Poland's zloty <EURPLN=> and the Czech crown <EURCZK=> were
up 0.6 percent and 0.4 percent respectively against the euro.
                                
 In Poland, the central bank's Monetary Policy Council is
also due to meet on interest rates on Wednesday, but analysts
expect the 10-strong body to leave rates unchanged until at
least mid-2010.
                                
 Polish and Czech bonds were also stronger on the back of a
better sentiment, although dealers in the Czech Republic said
expectations of a final interest rate cut this year were fading.
                                
 "The domestic bond market... still lacks strong stimuli
these days and yield curve volatility continues to be minimal as
even the short end does not follow bigger koruna's changes,"
CSOB analysts said. 
                                
 "It seems that the market has become quite sure that the CNB
will not change official rates for foreseeable future."
                                
 The Czech and Polish interest rates are at an all-time low
at 1.25 percent and 3.5 percent respectively.
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  25.782   25.878  +0.37%    +3.77%
Polish zloty     <EURPLN=>   4.12     4.143  +0.56%    -0.12%
Hungarian forint <EURHUF=> 267.35   268.35   +0.37%    -1.42%
Croatian kuna    <EURHRK=>   7.31     7.312  +0.03%    +0.75%
Romanian leu     <EURRON=>   4.279    4.279      0%    -6.18%
Serbian dinar    <EURRSD=>  94.34    94.34       0%    -5.15%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR   +3 basis points to  110bps over bmk*
7-yr T-bond   CZ7YT=RR    -3 basis points to  +110bps over bmk*
10-yr T-bond   CZ10YT=RR    -9 basis points to  +93bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -3 basis points to  +353bps over bmk*
5-yr T-bond   PL5YT=RR    -4 basis points to  +322bps over bmk*
10-yr T-bond PL10YT=RR    -2 basis points to  +287bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -5 basis points to  +519bps over bmk*
5-yr T-bond   HU5YT=RR    -4 basis points to  +475bps over bmk*
10-yr T-bond   HU10YT=RR  -3 basis points to  +412bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0948 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
 
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 (Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz;
Editing by Matthew Jones)
 ((dagmara.leszkowicz@thomsonreuters.com, RM:
dagmara.leszkowicz.reuters.com@reuters.net, tel +48 22 653 9718))