CEE MARKETS 3-Central European FX mixed, zloty retreats

                                
 * Stocks, currencies mixed
                                
 * Hungary reform plan still key, forint seen stuck for now
                                
 
 (Recasts, adds bonds, updates currencies and stocks)
                                
 By Jason Hovet and Radu Marinas
                                
 PRAGUE/BUCHAREST, Feb 17 (Reuters) - Central European
equities were mixed on Thursday and the Polish zloty retreated
after two days of gains but expectations for a rate rise next
month remained intact.
                                
 The forint <EURHUF=> rose 0.2 percent to 269.9 to the euro
by 1455 GMT. A dealer said it could firm further in the short
term to resistance levels of around 268.50 or at least stay
rangebound around 270.
                                
 The currency has gained about 1.2 percent versus the euro
this month, helped by expectations the government's fiscal
reform plans, due to be unveiled next month, will pave the way
for a sustainable improvement in public finances.
                                
 The Polish zloty <EURPLN=> retreated, falling 0.2 percent on
the day. It was bid at 3.915 to the euro, after gaining 1
percent over the previous two days, but expectations for a rate
rise next month remained in place.
                                
 The zloty was unmoved by the release of minutes from the
central bank's meeting in January, when the bank raised its key
rate by a quarter point to 3.75 percent. The minutes showed most
of the rate setters saw the January hike as the start of a
gradual monetary tightening cycle. [ID:nLDE71G1GC]
                                
 "We expect another rate hike (25 bps) in early March.
However, after inflation accelerated by 1.2 percent
month-on-month to 3.8 year/year in January there is a risk of a
larger, 50 bps hike in March," Nordea said in a research note.
                                
 "(Bonds rose) thanks to better sentiment (sparked) by (the
recent) stronger zloty and the fact that German bunds are now at
strong levels for two days now," a Warsaw trader said.
                                
 The Czech crown <EURCZK=> was steady at 24.32, and the
Romanian leu <EURRON=> hovered on the strong side of 4.25 to the
euro, a level it broke in the previous session. Dealers said it
was likely to remain in the 4.24/25 trading range.
                                
 Budapest <.BUX> and Bucharest <.BETI> stocks nudged higher
on Thursday, while shares in Warsaw <.WIG> and Prague <.PX> fell
slightly.
                                
 
                                
 HUNGARY WATCH
                                
 Hungary's forint has outperformed central European
currencies this year. However, it has begun to drift as markets
increasingly bet the central bank has finished monetary
tightening for now, and have been disappointed by a delay in the
unveiling of the government's reform plans.
                                
 Hungary's debt management agency and news reports indicated
on Wednesday that Budapest may struggle this year to keep its
structural deficit below the EU's 3 percent of GDP limit.
[ID:nLDE71F0MO]
                                
 "If reform steps disappoint investors, a bad track record is
anticipated to add to concerns over Hungary's outlook," Equilor
Investments said in a note.
                                
 "Hence, it is rather a risk which is not priced in, but
could disappear depending on the government's intentions."
                                
 A Reuters poll taken on Feb. 14-16 forecasts the National
Bank of Hungary (NBH) will keep interest rates on hold at its
meeting on Monday, after three quarter-point increases since
November. [ID:nLDE71F2ML]
                                
 If Hungary does keep rates steady that could weaken the
forint against the zloty <PLNHUF=R> given that Poland is
expected to increase interest rates further, a dealer said.
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2011 
Czech crown      <EURCZK=>   24.32    24.326  +0.02%   +2.8%
Polish zloty     <EURPLN=>    3.915    3.906  -0.23%   +1.1%
Hungarian forint <EURHUF=>  269.9    270.3    +0.15%   +2.99%
Croatian kuna    <EURHRK=>    7.405    7.405   0%      -0.34%
Romanian leu     <EURRON=>    4.247    4.247   0%      -0.33%
Serbian dinar    <EURRSD=>  103.7    103.62   -0.08%   +2.15%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +4 basis points to   55bps over bmk*
7-yr T-bond   CZ7YT=RR   +5 basis points to  +92bps over bmk*
10-yr T-bond   CZ9YT=RR   +3 basis points to  +95bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -1 basis points to  +519bps over bmk*
5-yr T-bond   HU5YT=RR   +2 basis points to  +483bps over bmk*
10-yr T-bond   HU10YT=RR  0 basis points to  +424bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1542 CET.
Currency percent change calculated from the daily domestic 
close at 1700 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news [EMRG]
Spot FX rates
Eastern Europe spot FX <EEFX=>    Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=>       Latin America spot FX <LATAMFX=>
Other news and reports  
World central bank news [CEN]  Economic Data Guide <ECONGUIDE> 
Official rates [GLOBAL/INT]  Emerging Diary [EMRG/DIARY] 
Top events [M/DIARY]  Diaries [DIARY] Diaries Index [IND/DIARY] 
 (Reporting by Reuters bureaus; Editing by Susan Fenton)