CEE MARKETS 3-FX edge off highs, Hungary industry disappoints

                                
 * FX, stocks give up earlier gains, slip with risk appetite
                                
 * Crown outperforms ahead of inflation data on Wednesday
                                
 * Hungary output disappoints, forint slips from 9-mth highs
                                
 
 (Updates prices)
                                
 PRAGUE, Feb 8 (Reuters) - Central European currencies mostly
edged lower on Tuesday as investors took a breath after recent
gains in the region, but the crown outperformed as markets
waited for more signals on when Czech interest rates would rise.
                                
 Expectations of higher interest rates have also buoyed the
Polish zloty. Czech markets are waiting on inflation data due on
Wednesday to gauge whether the central bank may raise interest
rates as early as its next meeting in March.
                                
 But currencies mostly gave up modest gains after data showed
Hungarian -- and German -- industrial output unexpectedly fell
in December, taking some of the shine off trade prospects for
central European economies. [ID:nLDE71715B]
                                
 The euro, the reference currency the region typically
tracks, slipped. Stocks also turned negative when risk appetite
slipped following a Chinese rate hike. [ID:nLDE7171G4]
                                
 "It is a bit jittery in the market; we saw this Chinese rate
hike and it was a slight risk-off (trade) on that," a
Stockholm-based central European currency dealer said.
                                
 "We have been trying to go stronger on all these CEE-3
(crown, forint and zloty) currencies. People are looking for
clues on where to go next."
                                
 The Czech crown <EURCZK=> gained 0.3 percent, while the
zloty <EURPLN=>, which hit its highest since mid-January in the
previous session thanks to ongoing interest rate hike
expectations, inched down less than 0.1 percent. 
                                
 The Hungarian forint <EURHUF=> lost 0.1 percent, pulling
back after nearing the nine-month highs it hit on Monday.
                                
 The leu <EURRON=> edged up 0.1 percent.
                                
 In Romania, the leu trailed, failing to get a boost from a
new two-year precautionary International Monetary Fund deal as
the country's monetary policy outlook remains unclear. Dealers
said the leu was likely to move sideways on this.
                                
 Analysts said the market seemed indecisive on the region's
currencies after the zloty, crown and Hungarian forint posted
more than 3 percent rises since the start of this year. 
                                
 The crown fell earlier from last week's peaks to the weak
side of 24 per euro. It bid around that level in the afternoon.
                                
 "We believe we should be lower than 24 (to the euro)," a
Prague dealer said.
                                
 "In the second half of the year inflation should go up and
interest rates should go up, so the crown should (move firmer)."
                                
 
                                
 HUNGARY OUTPUT WEAKER
                                
 Improved global sentiment and expectations over the
Hungarian government reform plans to be unveiled this month have
lifted Hungarian assets. [ID:nLDE7161M0]
                                
 Prime Minister Viktor Orban's government is working on a
600-650 billion forint plan to stabilise the budget, and vowed
on Monday to reduce the country's debt.
                                
 Hungary's industrial output dropped month-on-month, and
analysts said that was worrying given strong growth elsewhere,
but added it may not be the start of a trend. [ID:nLDE71626V]
                                
 "I would not read too much into these figures, monthly
figures can show pretty big swings, and they have throughout
2010. Still, this number is unsettling, and I hope that the next
one dispels worries," said Raiffeisen Bank analyst Zoltan Torok.
                                
 Currencies are expected to gain over the year as a whole
thanks to growing economic growth and trade, along with tighter
interest rate policy. <CEEFXPOLL>
                                
 
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2011 
Czech crown      <EURCZK=>   23.996   24.078  +0.34%   +4.18%
Polish zloty     <EURPLN=>    3.879    3.878  -0.03%   +2.04%
Hungarian forint <EURHUF=>  268.55   268.32   -0.09%   +3.51%
Croatian kuna    <EURHRK=>    7.414    7.409  -0.07%   -0.46%
Romanian leu     <EURRON=>    4.253    4.258  +0.12%   -0.47%
Serbian dinar    <EURRSD=>  103.3    103.427  +0.12%   +2.54%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -10 basis points to  32bps over bmk*
7-yr T-bond   CZ7YT=RR    -5 basis points to  +70bps over bmk*
10-yr T-bond   CZ9YT=RR    -3 basis points to  +77bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1444 CET.
Currency percent change calculated from the daily domestic 
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Catherine Evans)