CEE MARKETS 4-FX weaker, leu unfazed by 50 bps rate cut

                                
 * FX weaken on profit-taking after recent rally
                                
 * Romania cuts key rate by 50 bps to 8.5 pct as expected,
leu unfazed by the move
                                
 
                                
 (Adds fresh quote, prices)
                                
 By Krisztina Than and Dagmara Leszkowicz
                                
 BUDAPEST/WARSAW, Aug 4 (Reuters) - East Europe's currencies
weakened on Tuesday on profit-taking following a recent rally,
while the Romanian leu was a touch softer after the central bank
cut rates by 50 basis points.
                                
 Analysts said the Romanian central bank's move did not
affect the unit because it was widely expected by the market.
                                
 "We would have seen a larger rate cut today as being well
digested by the market as we see the RON relatively undervalued
vs. peers in the region, and with some of the largest potential
for appreciation," said Chevreux's Simon Quijano-Evans.
                                
 Romania's central bank also cut the minimum reserve
requirements on foreign currency-denominated liabilities
[ID:nL4422717] which analysts said showed it was eager to
support the banking sector.
                                
 Its fourth cut so far this year took its benchmark rate to
8.5 percent to match that of neighbouring Hungary, which cut
rates by 100 basis points last week.[ID:nL4379419]
                                
 
                                
 CROSS PLAYS?
                                
 Elsewhere, the Czech crown <EURCZK=> led losses, weakening
around 0.7 percent, Hungary's forint <EURHUF=> lost some 0.6
percent and the Polish zloty <EURPLN=> fell around 0.3 percent.
                                
 However, currencies recouped some ground in later trade
after better-than-expected housing data in the United States,
dealers said. [ID:nN04100854]
                                
 Poland's zloty has gained more than 8 percent since the
start of July. The forint has added only 2 percent in that time
and the crown and leu are both flat.
                                
 The region's stock markets were in the red on Tuesday, with
the Warsaw stock market <.WIG20> down 1.2 percent and Budapest
BUX <.BUX> losing 0.7 percent.
                                
 Some analysts said the Polish unit could be supported by
cross plays on the forint as the interest rate spread has
narrowed and Poland's economy is in better shape than Hungary's.
                                
 Unicredit recommended long zloty/forint trade in a note to
clients on Monday.
                                
 "Recent sentiment indicators ... suggest that countries with
more stable fundamental backdrops, together with looser monetary
and fiscal conditions (including Poland) are recovering faster
than countries with bigger financial stability worries
(including Hungary)," Unicredit analyst Gyula Toth said.
                                
 Poland's Deputy Finance Minister told Reuters on Tuesday the
country's budget deficit in the first seven months of 2009 may
have narrowed to around 15.5 billion zlotys from 16.6 billion
zlotys reported after June.[ID:nWAR008609]
                                
 Czech bonds and money markets were quiet on Tuesday, with
markets still split over whether the Czech central bank will cut
rates or hold them steady on Thursday.
                                
 In a Reuters poll published last week, 11 of 20 analysts
expected the Czech central bank to leave rates unchanged while 9
forecast a cut [ID:nLT506043].
                                
 Hungarian and Polish bonds eased slightly, tracking
currencies.
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  25.812   25.626   -0.72%   +3.65%
Polish zloty     <EURPLN=>   4.1      4.087   -0.32%   +0.37%
Hungarian forint <EURHUF=> 266.12   264.55    -0.59%   -0.97%
Croatian kuna    <EURHRK=>   7.339    7.334   -0.07%   +0.35%
Romanian leu     <EURRON=>   4.2      4.197   -0.07%   -4.42%
Serbian dinar    <EURRSD=>  92.847   93.037   +0.2%    -3.63%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   -29 basis points to  99bps over bmk*
4-yr T-bond   CZ4YT=RR   -29 basis points to  +138bps over bmk*
8-yr T-bond   CZ8YT=RR   +9 basis points to  +278bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +3 basis points to  +359bps over bmk*
5-yr T-bond   PL5YT=RR   +5 basis points to  +291bps over bmk*
10-yr T-bond PL10YT=RR   +2 basis points to  +267bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -8 basis points to  +667bps over bmk*
5-yr T-bond   HU5YT=RR   +6 basis points to  +605bps over bmk*
10-yr T-bond   HU10YT=RR +10 basis points to  +526bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1723 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
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 (Reporting by Reuters bureaus, Writing by Krisztina Than and
Dagmara Leszkowicz, Editing by Ruth Pitchford)