CEE MARKETS 2-Zloty steady after rate decision, ECB in focus

                                
 * Zloty little changed as market digests rate decision
                                
 * Investors eye ECB meeting
                                
 * Romania's GDP still contracting but at slower pace
                                
 
 (Adds fixed income, detail)
                                
 By Pawel Bernat
                                
 WARSAW, March 3 (Reuters) - Emerging European currencies
were little changed on Thursday as market participants digested
the Polish central bank's decision to keep borrowing costs
steady and awaited the ECB's decision on rates later in the day.
                                
 A majority of analysts expect the European Central Bank to
leave rates in the common currency zone on hold until at least
October but a growing minority see a hike in the third quarter.
[ECILT/EU]
                                
 The Polish central bank's 10-strong Monetary Policy Council
left its main rate unchanged at 3.75 percent on Wednesday,
citing weak wage pressure and investments and high unemployment,
but signalled further monetary tightening ahead to cool
accelerating inflation. [ID:nLDE7210Q0]
                                
 "After yesterday's decision the zloty weakened, but further
information from the press conference caused the unit's rebound
as the market read it as a signal for further hikes," a
Warsaw-based dealer said.
                                
 The zloty <EURPLN=> edged some 0.1 percent higher versus the
euro by 1009 GMT while Polish bonds were almost unchanged from
Wednesday's levels when the rate decision supported the shorter
end of the curve.
                                
"Today we await ECB remarks, particularly whether it is going
to sharpen its rhetoric. The prospects for potential rate
increases in the euro zone may translate into higher yields on
five-year bonds," a Warsaw-based fixed income dealer said.
                                
 
                                
 ROMANIA GDP IMPROVES
                                
 The Romanian leu <EURRON=> edged some 0.1 percent higher,
remaining near nine-month highs and moderately supported by
final GDP figures for the fourth quarter that showed the
country's economy contracted by 0.6 percent on an annual basis
but by less than previously expected. [ID:nLDE7220GQ]
                                
 "Overall, the figures are more positive than initial
expectations which ... bodes well for the economy this year," a
Bucharest-based dealer said.
                                
 Analysts polled by Reuters before a flash release last month
had forecast of a 1.5 percent contraction in GDP.
                                
 The Czech crown <EURCZK=> and Hungarian forint <EURHUF=>
were also some 0.1 percent stronger against the common currency.
                                
 Dealers said the impact of Hungary's fiscal adjustment
package to cut its deficit, unveiled on Tuesday, had faded for
now.
                                
 The unveiling of the package had sent the forint lower as
investors were disappointed about a lack of details.
[ID:nLDE72005O]
                                
 Dealers said the forint could gain further if global
investor sentiment continued to improve. Sentiment picked up
slightly on Thursday as oil prices fell after the Arab League
said a peace plan for Libya was being mooted. [O/R]
                                
 "We're quiet, and the overall market optimism is probably
going to drive the forint stronger in the near term," a dealer
said in Budapest.
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2011 
Czech crown      <EURCZK=>  24.238   24.254  +0.07%    +3.14%
Polish zloty     <EURPLN=>   3.975    3.98   +0.13%    -0.43%
Hungarian forint <EURHUF=> 270.9    271.25   +0.13%    +2.61%
Croatian kuna    <EURHRK=>   7.408    7.413  +0.07%    -0.38%
Romanian leu     <EURRON=>   4.199    4.201  +0.05%    +0.81%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -5 basis points to  18bps over bmk*
7-yr T-bond   CZ7YT=RR    -3 basis points to  +76bps over bmk*
10-yr T-bond   CZ9YT=RR   +1 basis points to  +81bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -2 basis points to  +345bps over bmk*
5-yr T-bond   PL5YT=RR    -4 basis points to  +336bps over bmk*
10-yr T-bond PL10YT=RR    -3 basis points to  +301bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1109 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
and Pawel Bernat; Editing by Toby Chopra and Susan Fenton)