CEE MARKETS 3-FX up after PMIs, zloty may outperform soon

                                
 * PMIs support crown, zloty; forint lags
                                
 * Romania's leu softer to start key week
                                
 * Zloty should gain further, may outperform peers
                                
 
  (Adds fresher quote, prices)
                                
 By Jason Hovet and Dagmara Leszkowicz
                                
 PRAGUE/WARSAW, Nov 2 (Reuters) - A fall in equity markets
muted gains for central European currencies on Monday but some
analysts still remain bullish for the region expecting the
Polish zloty to gain significantly.
                                
 The region's stocks were all in the red, with Budapest
<.BUX> leading losses, falling almost 2 percent at the start of
the week.
                                
 The stocks' performance held back currencies, which gained
only slightly after better than expected Purchasing Managers'
Index data.
                                
 However, "we are bullish on the zloty in the period ahead,
mainly reflecting a positive assessment on the country
fundamentals and an attractive valuation," analysts at Bank of
America/Merrill Lynch wrote in a note.
                                
 They also said they recommended a long zloty/Czech crown
position.
                                
 At 1532 GMT the zloty <EURPLN=> was up some 0.4 percent
against the euro, while the Czech crown <EURCZK=> strengthened
around 0.7 percent to the common currency.
                                
 In the short run the crown got slight support from PMI data 
showing the country's index rose in October almost to the
breakeven 50 level that divides contraction from growth. 
                                
 Poland's PMI rose last month to a 17-month high of 48.8
points while in Hungary the index, calculated differently,
dipped to 48.2. [ID:nL2296405] [ID:nL2604595]
                                
 The forint <EURHUF=> was 0.1 percent weaker to the euro,
trading around 274.98.
                                
 Elswhere, Romania's leu <EURRON=> hovered on the weak side
of 4.3 per euro ahead of an expected interest rate cut on
Tuesday and a confidence vote in designate Prime Minister Lucian
Croitoru's government later in the week. [ID:nLU224925]
                                
 
                                
 IMF KEY
                                
 Some analysts say political and economic troubles in Ukraine
may weigh on the region's currencies if the International
Monetary Fund blocks its next aid tranche to the country, whose
President Viktor Yushchenko defied the fund on Friday by signing
a bill that would increase the minimum wage by over 20 percent.
[ID:nLU651399]
                                
 Romania and Hungary have both taken IMF help, as has Latvia.
                                
 "If IMF withdraws its help (for Ukraine), the market would
think whether the same thing could happen on Latvia and that
would definitely affect the region," said Bartosz Pawlowski, FX
strategist at BNP Paribas.
                                
 On the bond market, yield premiums have started to slip for
higher-yielding Hungarian and Romanian assets, although some
analysts said the latest bout of political uncertainty will keep
Romanian policymakers from cutting rates. [ID:nL7588830]
                                
 The Czechs have the lowest rates in the region at 1.25
percent, and talk of cutting more by central bank Governor
Zdenek Tuma has knocked the crown 4 percent since October, which
analysts say limits scope for easing. [ID:nLU554406]
                                
 Still, dealers said markets have mostly priced in a cut,
which could lead to correction on bond yields and rates.
 --------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   26.329    26.513  +0.7%   +1.61%
Polish zloty     <EURPLN=>   4.244    4.259  +0.35%    -3.04%
Hungarian forint <EURHUF=>   274.98  274.73   -0.09%   -4.16%
Croatian kuna    <EURHRK=>   7.242    7.225   -0.23%   +1.7%
Romanian leu     <EURRON=>   4.301    4.306  +0.12%    -6.66%
Serbian dinar    <EURRSD=>   93.55    93.31   -0.26%   -4.35%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR    -45 basis points to  91bps over bmk*
7-yr T-bond   CZ7YT=RR    -1 basis points to  +107bps over bmk*
10-yr T-bond   CZ10YT=RR    -2 basis points to  +100bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +1 basis points to  +367bps over bmk*
5-yr T-bond   PL5YT=RR    0 basis points to  +322bps over bmk*
10-yr T-bond PL10YT=RR    -3 basis points to  +287bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -1 basis points to  +546bps over bmk*
5-yr T-bond   HU5YT=RR    0 basis points to  +485bps over bmk*
10-yr T-bond   HU10YT=RR  -3 basis points to  +425bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1532 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 and
Dagmara Leszkowicz; Editing by Andy Bruce/Ruth Pitchford)