CEE MARKETS 3-Zloty firmer after cbank hikes rates as expected

                                
 * Polish c.bank hikes key rate by 25 bps to 4.00 pct
                                
 * Zloty firms 0.1 pct after announcement
                                
 * Forint up 0.1 pct at new 11-month highs
                                
 
                                
(Adds Polish cbank rate decision)
                                
 By Jason Hovet and Krisztina Than
                                
 PRAGUE/BUDAPEST, April 5 (Reuters) - The zloty extended
modest gains against the euro on Tuesday after Poland's central
bank raised its key interest rate <PLINTR=ECI> as expected,
while the region's other currencies were flat to higher.
                                
 A Reuters poll showed last week that a majority of analysts
expected the 10-strong Monetary Policy Council to raise rates by
another 25 basis points to 4 percent after it kicked off the
cycle of monetary policy tightening in January.
                                
 The bank will release a statement and hold a news conference
explaining its decision at 1400 GMT. [ID:nLDE73311U]
                                
 Other emerging European currencies were flat or slightly
stronger versus the euro, with the Hungarian forint <EURHUF=> up
0.1 percent to trade at new 11-month highs at around 264.50.
  Twenty-three of 29 analysts in a Reuters poll last week
expected Poland to raise borrowing costs by a quarter percentage
point amid concerns over accelerating inflation. [ID:nLDE72T1CI]
                                
 The zloty <EURPLN=> added 0.1 percent versus the euro
immediately after the rate decision was announced, while bonds
were little changed. At 1209 GMT the zloty was up 0.3 percent
from Monday.
                                
 Analysts said while the market impact of the Polish rate
hike was expected to be modest, comments from the central bank
would be closely eyed for clues concerning the rate outlook for
the coming months.
                                
 "The hike may cause a slight strengthening of the zloty and
a decline of bond prices at the short end of the curve. However,
the reaction will be moderate as the move was already largely
priced in by the markets," said Rafal Benecki, senior economist
at ING Bank Slaski SA.
                                
 "The MPC statement and inflation data for March due next
week will be more important."
                                
 The zloty has bounced around in the past month, reflecting
rate expectations, but it is weighed down by concern over a
possible revision to current account data and snags in the
government's $5 billion privatisation plan. [ID:nLDE72U0AA]
                                
 
                                
 FORINT HOLDS STRONG
                                
 Hungary's forint has been a top performer with a 3 percent
gain in the past three weeks, more than double the pace of the
leu, as its economic outlook improves.
                                
 On Tuesday it <EURRON=> added 0.2 percent, extending gains
following a strong treasury bill sale on Monday.
                                
 The Czech crown <EURCZK=> was flat.
                                
 In Hungary, the strength of the currency has given a lift to
debt markets, with the 5-year bond yield at a two-month low.
                                
 An auction of 3-month Treasury bills attracted strong demand
earlier on Tuesday. [ID:nEAP000700]
                                
 Attention will turn to Hungarian budget data due on
Thursday. The budget deficit as of the end of February hit 81.4
percent of the government's full-year target, and analysts
expect it to increase for the quarter as a whole.
[ID:nLDE7261YU]
                                
 "At the same time the market knows that extraordinary
revenues (pension fund assets, crisis taxes) will later reverse
the current ugly budget situation," CIB Bank said.
                                
 Markets expect a euro zone interest rate rise this week but
analysts do not expect this to lead to knee-jerk reactions from
central European monetary policymakers. [ID:nLDE7290H3]
                                
 Most analysts believe that Hungary's central bank has
already finished its 75 basis point tightening cycle.
                                
 The Czechs have yet to start tightening and markets are not
pricing a change in until the middle of the year, while Romania
left rates flat last week and is not expected to move any time
soon.
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2011 
Czech crown      <EURCZK=>  24.422    24.42   -0.01%   +2.37%
Polish zloty     <EURPLN=>   4.009    4.021   +0.3%    -1.27%
Hungarian forint <EURHUF=>   264.4   264.62   +0.08%   +5.14%
Croatian kuna    <EURHRK=>   7.371    7.369   -0.03%   +0.12%
Romanian leu     <EURRON=>   4.115    4.124   +0.22%   +2.87%
Serbian dinar    <EURRSD=>  101.91   102.39   +0.47%   +3.94%
All data taken from Reuters at 1406 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason
Hovet/Krisztina Than; editing by Hugh Lawson, John Stonestreet)