CEE MARKETS 3-FX retreats as optimism fades, caution takes over

                                
 (Changes dateline, new throughout)
                                
 BUDAPEST, Sept 22 (Reuters) - Most emerging European
currencies retreated by Monday afternoon as positive sentiment
over U.S. financial bailout plans subsided, and risk aversion
increased again.
                                
 "The market opened in positive sentiment this morning ...
and then the sky darkened again, the forint was pushed past 240
and risk aversion increased," a Hungarian currency dealer said.
                                
 Hungary's forint <EURHUF=> was 0.2 percent weaker at 239.85
versus the euro, while the Polish zloty <EURPLN=> was 0.15
percent lower at 3.297 to the euro.
                                
 Monday's central bank data showed Polish net inflation
<PLNINF=ECI>, which excludes food and fuel prices, stood at 4.0
percent year-on-year in August, up from 3.5 percent in July and
0.2 percentage points above analysts' expectations.
                                
 "Yields are generally two basis points higher than in the
morning, which can be linked to net inflation coming in above
market expectations as well as lower futures for German bonds,"
a Warsaw-based dealer said.
                                
The Czech crown <EURCZK=> also edged lower in quiet trade,
hovering around the technical 24.00 per euro level, and dealers
say caution is still evident in the market with investors afraid
to get caught in sudden moves.
                                
 "The dust is just settling now from Friday's big stock
moves," said a Prague currency dealer. "The crown is really
moving with indecision right now."
                                
 High-yielding currencies like the zloty and forint got a
boost at the end of last week from growing risk appetite after
the United States started putting together plans to clear up
some of the bad debt that has clogged global credit markets.#
                                
 However, dealers say there is still caution in the market as
details of the U.S. plans come to light, with investors keen to
keep exposure to swift moves minimal.
                                
 Markets will closely watch the region's central banks this
week and next, as they decide about interest rates.
                                
 The Polish central bank is expected to leave the key rate at
6.0 percent on Sept. 24, the first in a series of policy
meetings over the next two weeks.
                                
 The Czech central bank, which was the first to turn the
cycle with a 25 basis point cut to 3.50 percent last month, will
likely hold rates steady on Sept. 25, a Reuters poll showed on
Friday, but cut rates once more before the end of the year.
                                
 Hungary's central bank is also expected to hold rates at 8.5
percent on Sept. 29 despite poor economic growth prospects.
                                
 Among other regional currencies, Romania's leu <EURRON=>
inched up 0.11 percent to 3.627 per euro on Monday.
 ----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2008 
Czech crown      <EURCZK=>   23.975   23.98   +0.02%   +9.52%
Polish zloty     <EURPLN=>    3.297    3.292  -0.15%   +8.43%
Hungarian forint <EURHUF=>  239.850  239.350  -0.21%   +5.14%
Croatian kuna    <EURHRK=>    7.112    7.101  -0.15%   +2.93%
Romanian leu     <EURRON=>    3.627    3.631  +0.11%   -1.31%
Serbian dinar    <EURRSD=>   76.208   76.620  +0.54%   +3.24%
All data taken from Reuters at 1613 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR   +7 basis points to  -5bps over bmk*
5-yr T-bond   CZ5YT=RR   +3 basis points to   -17bps over bmk*
10-yr T-bond   CZ9YT=RR   +6 basis points to  +25bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +2 basis points to  +226bps over bmk*
5-yr T-bond   PL5YT=RR    1 basis points to  +181bps over bmk*
10-yr T-bond PL10YT=RR    -1 basis points to  +154bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +1 basis points to  +500bps over bmk*
5-yr T-bond   HU5YT=RR    -2 basis points to  +466bps over bmk*
10-yr T-bond   HU10YT=RR  -3 basis points to  +359bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1710 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.
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  (Reporting by Reuters bureaus; writing by Krisztina Than;
editing by Stephen Nisbet)