CEE MARKETS 2-FX flat, but worse sentiment weighs on region

                                
 * Currencies almost flat, US data still weighs on region
                                
 * Polish bonds continue rally, yields down sharply this week
                                
 * Hungary's market closed due to national holiday
                                
 
                                
 (Adds fixed income, detail)
                                
 WARSAW, Aug 20 (Reuters) - Emerging Europe's currencies were
virtually flat on Friday but traders said Thursday's weaker than
expected U.S. data, which renewed concerns for the global
recovery, continued to weigh on markets.
                                
 Dealers said sentiment on the forex market would likely be
dictated by stocks as well as bonds in the coming hours because
of a lack of global macroeconomic data due on Friday.
                                
 "(The region's stock markets) are a great barometer in terms
of the zloty," said Przemyslaw Winiarczyk, dealer at Millennium
bank in Warsaw. "Apart from this, investors still closely watch
developments on the bond market."
                                
 By 0842 GMT the Czech crown <EURCZK=> was 0.1 percent up to
the euro, while the Polish zloty <EURPLN=> Romania's leu
<EURRON=> were virtually unchanged against the common currency.
                                
 Hungary's forint <EURHUF=> was 0.1 percent weaker in thin
trade, with domestic markets closed for a national holiday.
                                
 Yields on the region's bonds have fallen to multi-week or
lifetime lows this week as foreign investors opted to buy paper
in emerging economies such as Poland and Turkey with relatively
positive fundamentals and higher yields than their core market
counterparts.
                                
 Romania's finance ministry rejected all bids at a 5-year
government bond tender on Thursday, after investors asked for
higher yields than the finance ministry's self-imposed 7 percent
ceiling. [ID:nLDE67I15B]
                                
 Polish bonds resumed their week-long rally on Friday after a
brief pause. Their yields have tumbled some 12-28 basis points
along the curve since the start of the week.
                                
 Stock markets were all in the red, losing 0.3-1.2 percent
across the region.
                                
 
                                
 APPETITE FOR DEBT
                                
 Poland's central bank is due to release net inflation data
for July at 1200 GMT, with the market expecting the figure to
stand at 1.3 percent. Analysts have said the data is unlikely to
have a major impact on financial markets.
                                
 "The bond market is rallying, foreign investors are buying 
Polish papers and the reading would have to be really high to
threaten them," said Krzysztof Izdebski, a fixed income dealer
at PKO BP.
                                
 The Polish finance ministry is due to publish its offer of
52-week treasury bills for next Monday's auction at 1000 GMT.
                                
 Romania's finance ministry will hold a 6-month treasury bill
auction next Monday and analysts expect the ministry to borrow
significantly above the planned 800 million lei to compensate
for what it failed to borrow at previous tenders in August.
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2010 
Czech crown      <EURCZK=>  24.826   24.845  +0.08%    +6.01%
Polish zloty     <EURPLN=>   3.965    3.965      0%    +3.51%
Hungarian forint <EURHUF=> 278.79   278.5    -0.1%     -3.03%
Croatian kuna    <EURHRK=>   7.28     7.282  +0.03%    +0.4%
Romanian leu     <EURRON=>   4.228    4.229  +0.02%    +0.22%
Serbian dinar    <EURRSD=> 104.52   104.47   -0.05%    -8.27%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +1 basis points to  112bps over bmk*
7-yr T-bond   CZ7YT=RR    0 basis points to  +116bps over bmk*
10-yr T-bond   CZ9YT=RR   +3 basis points to  +118bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -17 basis points to  +385bps over bmk*
5-yr T-bond   PL5YT=RR    -14 basis points to  +369bps over bmk*
10-yr T-bond PL10YT=RR    -15 basis points to  +310bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1042 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 Andrew Heavens)