CEE MARKETS 1-FX weak on Baltic woes, but no major damage seen

                                
 * Latvia puts pressure on CEE mkts, but less than before
                                
 * Czech Sept. CPI dips m/m, rate cuts seen
                                
 
                                
 By Marius Zaharia
                                
 BUCHAREST, Oct 9 (Reuters) - Central European currencies
weakened on Friday, with the Polish zloty leading losses, as
some investors feared a Baltic contagion although the reaction
was less brutal than when Latvia's crisis flared in June.
                                
 Currencies started to weaken on Thursday, when Latvia said
it was working on more budget cuts measures under pressure from
international lenders and was considering a plan to bail out
homeowners at the expense of banks. [ID:nL8188838]
                                
 The dispute revived currency devaluation fears which
triggered some risk aversion in the region, which was also under
pressure from a stronger dollar. [ID:nT148663]
                                
 AT 0731 GMT, the zloty <EURPLN=> was down 0.5 percent on the
day against the euro, Hungary's forint <EURHUF=> was 0.3 percent
weaker, while the Czech crown <EURCZK=> and the Romanian leu
<EURRON=> were only down a touch.
                                
 The moves add to losses of up to 0.4 percent on the day on
Thursday, far less than in June when central European markets
were pressured for weeks by devaluation fears.
                                
 Analysts say the region appears largely insulated from
Latvia's woes as the worst of the global crisis has past and
investors will better discern between economies. [ID:nL7628198]
                                
 "It is mainly a market reflex this time round," Commerzbank
said in a note.
                                
 "The current weakness of HUF, CZK and PLN therefore provides
short term potential for appreciations, either once the crisis
is overcome ... or after the big bang in Latvia has occurred and
it becomes obvious that it is inconsequential."
                                
 In the Czech Republic, expectations for interest rate cuts
increased after consumer prices dipped 0.4 percent in September
from August. [ID:nL9680950]
                                
 "The CPI index now is among the set of arguments that the
Czech economy might need another stimulus from the central bank
by lowering interest rates," said Radomir Jac of Generali PPF
Asset Management.
                                
 With no other major events scheduled on Friday, markets were
waiting for a no-confidence vote for Romania's minority
government after the ruling coalition fell apart. [ID:nL7608185]
                                
 Politics weighed on the zloty as well. On Wednesday, Prime
Minister Donald Tusk ditched three ministers and sacked the head
of an anti-graft body in an effort to draw a line under a
lobbying scandal that has harmed his cabinet's image.
[ID:nL7354676]
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  25,846  25,804   -0,16%   +3,51%
Polish zloty     <EURPLN=>   4,26    4,24    -0,47%   -3,4%
Hungarian forint <EURHUF=> 271,05  270,35    -0,26%   -2,77%
Croatian kuna    <EURHRK=>   7,251   7,255   +0,06%   +1,57%
Romanian leu     <EURRON=>   4,281   4,275   -0,14%   -6,23%
Serbian dinar    <EURRSD=>  92,87   92,89    +0,02%   -3,65%
All data taken from Reuters at 0931 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
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(Reporting by Reuters bureaus, writing by Marius Zaharia;
Editing by Mike Peacock)