CEE MARKETS 3-Hungary bonds weaker after CPI, forint slips

                                
 * Hungarian bond yields up across curve after rise in CPI
                                
 * Forint falls, debt agency mulls euro bond issue
                                
 * Zloty weaker on current account
                                
 * Czech crown shrugs off government crisis
                                
 
                                
 By Michael Winfrey and Sandor Peto
                                
 PRAGUE/BUDAPEST, April 12 (Reuters) - Hungarian government
bonds fell after data showing a jump in the country's inflation
rate, while global risk aversion knocked currencies and other
assets in emerging markets including Central Europe lower.
                                
 The euro's surge against the dollar helped most of the
region's currencies firm from session lows, but increased
concerns over Japan's nuclear disaster weighed on risk appetite.
                                
 The region's main equity indices fell, led by Prague's <.PX>
which shed two percent by 1412 GMT, as shares in developed
markets also fell.
                                
 The forint <EURHUF=> was bid at 266.25 versus the euro, half
a percent weaker from Monday but up from the day's 267.03 low.
                                
 Poland's zloty <EURPLN=> recovered from an early session
loss and edged back towards flat when a member of the central
bank's Monetary Policy Council said interest rates should rise.
                                
 Hungarian data showed inflation came in at 4.5 percent in
March, fuelled by rising food prices, with a 2.5 percent jump in
core inflation that indicated rising global commodity prices
have filtered into the wider economy.
                                
 The data pushed up bond yields by 5-17 basis points across
the curve and analysts said it had weakened expectations of
policy easing closer to the end of the year. Traders said the
rise was natural after big falls in the past months.
                                
 "I don't think, however, that this is a reversal of the
trend (of yield decline), the country's assessment remains
positive," one fixed income trader said.
                                
 Hungary is expected to send its euro convergence plan to the
European Commission on Friday and to include some further
details of its fiscal reforms. Investors have responded
positively to the outlines of the reform plans.
                                
 The country said it would hold meetings with European
investors, which may be followed by a bond denominated in euros
to cover the rest of its 2011 foreign currency financing need
after dollar bond issues in the past weeks. [ID:nLDE73B114]
                                
 The government's plans to overhaul the central bank law and
raise an extraordinary tax on pharmaceutical firms have curbed
the forint's recent gains this week. [ID:nLDE73A1EI]
                                
 Romania's leu <EURRON=> was bid at 4.104 versus the euro, a
shade firmer from Monday and up from the day's low at 4.1163.
                                
 The Czech crown <EURCZK=> eased 0.2 percent to 24.431.
                                
 Serbia's dinar, up almost 4.8 percent on the year, gained
slightly after Prime Minister Mirko Cvetokovic said his
government aimed to finalise a new International Monetary Fund
financing deal in September. [ID:nLDE73B0PN]
                                
 
                                
 MARKETS SHRUG OFF CZECH TURMOIL 
                                
 Poland's zloty eased quarter of a percentage point from
Monday to 3.976 against the euro, up from early lows at 3.9815.
                                
 A central bank official told Reuters on Monday the 'errors
and omissions' category in the current account data would be
revised to reflect at least a 1 percent of GDP increase in the
deficit. [ID:nLDE73A0V8]
                                
 But the zloty was helped on Tuesday by comments from central
banker Andrzej Bratkowski who said rates should rise to 4.5
percent from 4 percent now and stay there for at least three
quarters. [ID:nLDE73B05G]
                                
 A leading daily reported Poland's 2010 fiscal deficit could
amount to 7.4 percent of gross domestic product, less than the
7.9 percent previously estimated by the government.
[ID:nLDE73A0V8]
                                
 Warsaw has pledged to cut its fiscal deficit to 3 percent of
GDP by 2012, but analysts are sceptical that it can do so. On
Monday, ratings agency Standard & Poor's said the government
should embark on fiscal consolidation.
                                
 The Czech crown mostly shrugged off a looming cabinet
reshuffle resulting from an alleged graft scandal in which
deputies from the junior ruling Public Affairs party are
reported to have received payments from de-facto party head Vit
Barta to remain loyal. [ID:nLDE73A1J9]
                                
 Barta resigned from his transport minister post last week
and has denied wrongdoing, but Prime Minister Petr Necas has
moved to sack two other ministers from the party in a shakeup
that has threatened to break apart his three-party coalition.
                                
 Analysts have warned the crisis could further slow fiscal
reforms that have already slowed due to coalition infighting
over issues including the levels of tax hikes and other issues.
                                
 "The question now is whether the coalition can sort out its
problems before the markets begin pricing in a more bearish
scenario and adding risk premia onto the currency," said Nomura
analyst Peter Attard Montalto.
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2011 
Czech crown      <EURCZK=>   24.431    24.376  -0.23%   +2.33%
Polish zloty     <EURPLN=>   3.976     3.966   -0.25%    -0.45%
Hungarian forint <EURHUF=>   266.25    264.9   -0.51%   +4.41%
Croatian kuna    <EURHRK=>   7.364     7.366   +0.03%   +0.22%
Romanian leu     <EURRON=>   4.104     4.106   +0.05%   +3.14%
Serbian dinar    <EURRSD=>   101.06    101.11  +0.05%   +4.82%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +7 basis points to  -8bps over bmk*
7-yr T-bond   CZ7YT=RR   +2 basis points to  +45bps over bmk*
10-yr T-bond   CZ9YT=RR    -2 basis points to  +56bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +5 basis points to  +318bps over bmk*
5-yr T-bond   PL5YT=RR   +6 basis points to  +298bps over bmk*
10-yr T-bond PL10YT=RR   +6 basis points to  +270bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +10 basis points to  +439bps over bmk*
5-yr T-bond   HU5YT=RR   +23 basis points to  +411bps over bmk*
10-yr T-bond   HU10YT=RR +15 basis points to  +367bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1612 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
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 (Reporting by Budapest buros, writing by Michael Winfrey/Sandor
Peto; Editing by Catherine Evans/Ruth Pitchford)