CEE MARKETS 3-FX mostly down, market still focused on Libya

                                
 * FX weaker, market eye external factors, focus on Libya
                                
 * Polish, Hungary's retail sales disappoint
                                
 * Czechs sell bonds due 2014 with decent demand
                                
 
                                
(Updates throughout)
                                
 By Marton Dunai and Dagmara Leszkowicz
                                
 BUDAPEST/WARSAW, Feb 23 (Reuters) - Emerging European
currencies mostly weakened on Wednesday and market players
expect units to remain under pressure as concerns over turmoil
in Libya is expected to limit appetite for riskier assets
further on.
                                
 "We have a relatively calm session and after the zloty had
weakened to the euro (on Tuesday) it stabilised at around 3.95,"
said Bartlomiej Rostek, dealer at ING bank in Warsaw.
                                
 "Tensions in North Africa and Middle East won't disappear in
short-term, so one should expect the zloty to remain in a range
of 3.95-3.98 over the next 2-3 days."
                                
 By 1428 GMT the Polish zloty <EURPLN=> was off 0.3 percent,
the Hungary's forint <EURHUF=> and Romanian leu <EURRON=> each
fell some 0.2 percent. The Czech crown <EURCZK=> was flat.
                                
 Stocks in the region were mixed on Wednesday with Warsaw's
main  WIG20 index <.WIG20> up some 0.5 percent. Prague's PX
<.PX> was flat and Budapest's BUX <.BUX> fell 0.9 percent.
                                
 On the bonds market, Czechs sold a total of 7.9 billion
crowns in bonds maturing in 2014 with investors demand more than
doubled the supply. [ID:nLDE71M19A]
                                
 The Polish government papers were slightly stronger with
dealers attributing today's gains to weaker-than-expected retail
sales data that dampened expectations for a quick interest rate
increases.
                                
 "The central bank's decision due next week would be the key
for the sentiment (on the debt market)," one Warsaw-based fixed
income dealer said.
                                
 
                                
 SALES DISSAPOINT
                                
 Polish retail sales data for January surprised on the
downside, while unemployment reading grew substantially, which
analysts said should prompt the central bank to keep rates
unchanged at its meeting next week. [ID:nLDE71M0L8]
                                
 Poland's central bank Governor Marek Belka has warned that
Poland's first rate hike after an 18-month pause was no sign of
an impending cascade of tightening. Two other rate setters
echoed that on Tuesday. [ID:nLDE71L2DC]
                                
 For a Reuters FX column on Polish monetary tightening click
on: [ID:nLDE71L0V2]
                                
 In Hungary, weak December retail sales showed soft domestic
demand during the Christmas season, but the data left the forint
unfazed as markets eye fiscal reforms and a reshuffle of the
central bank's rate-setting Monetary Council.
                                
 The fall in appetite for risk may have a differing impact on
different currencies, in particular the forint and the zloty,
analysts say.
                                
 "We think the market is overweight in Poland (in currency and
bonds), but underweight in Hungary (mostly in bonds). We
believe that in the current environment PLN/HUF could move
lower and Polish markets could underperform," UniCredit said in
a daily note to clients.
                                
 Warsaw's central bank, which broke an 18-month period of
record low interest rates to tighten in January, will not move
with haste now, policymakers said on Tuesday. 
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2011 
Czech crown      <EURCZK=>  24.515   24.511   -0.02%   +1.98%
Polish zloty     <EURPLN=>   3.971    3.959   -0.3%    -0.33%
Hungarian forint <EURHUF=> 272.8    272.23    -0.21%   +1.9%
Croatian kuna    <EURHRK=>   7.408    7.409   +0.01%   -0.38%
Romanian leu     <EURRON=>   4.231    4.224   -0.17%   +0.05%
Serbian dinar    <EURRSD=> 102.7    102.52    -0.18%   +3.14%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -4 basis points to  25bps over bmk*
7-yr T-bond   CZ7YT=RR    -3 basis points to  +88bps over bmk*
10-yr T-bond   CZ9YT=RR   +2 basis points to  +93bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -4 basis points to  +359bps over bmk*
5-yr T-bond   PL5YT=RR    -3 basis points to  +344bps over bmk*
10-yr T-bond PL10YT=RR    -1 basis points to  +310bps over bmk*
The P
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -4 basis points to  +520bps over bmk*
5-yr T-bond   HU5YT=RR    -4 basis points to  +485bps over bmk*
10-yr T-bond   HU10YT=RR  -4 basis points to  +431bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1528 CET.
Currency percent change calculated from the daily domestic 
close at 1600 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 bureaux, writing by Marton Dunai and
Dagmara Leszkowicz; Editing by Patrick Graham/Toby Chopra)