CEE MARKETS 4-Zloty rebounds after losses on fading euro hopes

                                
 * Polish zloty leads gains as sentiment improves
                                
 * Investors worried about Polish euro plans, swine flu
                                
 * Analysts expect Polish rates flat on Wednesday
                                
 
  (Updates throughout)
                                
 By Marius Zaharia and Jason Hovet
                                
 PRAGUE/BUCHAREST, April 28 (Reuters) - The Polish zloty 
rallied late on Tuesday as data improved investors' risk
tolerance, allowing the currency to recoup a small part of its
losses caused by doubts over the country's euro entry plans.
                                
 U.S. housing data [ID:nN28302533] and rising consumer
confidence [ID:nN28301794] reduced risk aversion despite worries
about a global swine flu outbreak which has scared emerging
markets this week.
                                
 The swine flu threatened to add to a global slowdown,
hitting central Europe's export-driven economies, which have
already buckled under a drop in demand for their cars,
televisions and other goods in the West.
                                
 "U.S. news triggered some stop losses in the region,
especially in the zloty," one dealer said. "But it looks only
like a small breath of air, the problems remain."
                                
 In Poland, following a higher than forecast 2008 budget
deficit, the government approved an updated euro plan without
revising its 2012 target date, but conceded that a sharp
economic downturn may hamper it. [ID:nLR669471] [ID:nLR282949]
                                
 "The investors have understood that it's no rose garden down
here," said a Warsaw-based trader. "It now seems we don't meet
... Maastricht criteria and one can see that ERM2 entry won't
come now but in some time."
                                
 The zloty <EURPLN=> gained 1 percent from Monday's domestic
close by 1440 GMT, after leading losses in the morning. The
Hungarian forint <EURHUF=> rose 0.6 percent and the Czech crown
<EURCZK=> dropped 0.2 percent.
                                
 Poland is in better shape than its peers to cope with the
global crisis, but an aggressive monetary easing cycle and
companies' exposure to soured currency options hurt the zloty,
which lost around 30 percent from summer highs.
                                
 However, analysts expect the central bank to halt easing on
Wednesdaynd the country's financial watchdog said it halved its
FX option exposure forecast to 4.5 billion zlotys.
[ID:nLS809133] [ID:nLS483867]
                                
 
                                
 HARD TO JOIN
                                
 A Reuters poll showed on Tuesday a volatile zloty and a
stubborn budget gap will likely delay Poland's euro zone entry
by a year. [ID:nLS413277]
                                
 The Czech Republic, Hungary and Latvia, whose governments
have all collapsed this year, are not expected to join until
2014, a year later than the last poll's forecast. Romania and
Bulgaria were seen joining only in 2015, unchanged from last
time.
                                
 Analysts expect nearly all of the region's economies to
slide into recession this year due to falling demand for their
goods from western markets.
                                
 In Hungary, the three-month rolling unemployment rate rose
to 9.7 percent in January-March from 9.1 percent in
December-February. [ID:nBUD002923]
                                
 In Romania, which expects a first tranche of IMF-led
financial aid next month, the leu <EURRON=> weakened by 0.2
percent at 4.216 per euro.
                                
 In debt markets, Polish bonds remained virtually flat, while
Hungarian bonds ticked up. The Czech Republic returned to
international markets with the sale of a 5-1/2 year eurobond on
Tuesday [ID:nLS792693].
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  26.717   26.666   -0.19%   +0.13%
Polish zloty     <EURPLN=>   4.488    4.532   +0.98%   -8.31%
Hungarian forint <EURHUF=> 293.13   294.78    +0.56%  -10.09%
Croatian kuna    <EURHRK=>   7.433    7.435   +0.03%   -0.91%
Romanian leu     <EURRON=>   4.216    4.208   -0.19%   -4.78%
Serbian dinar    <EURRSD=>  95.215   95.53    +0.33%   -6.02%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -14 basis points to  171bps over bmk*
4-yr T-bond   CZ4YT=RR   +5 basis points to  +204bps over bmk*
8-yr T-bond   CZ8YT=RR   +2 basis points to  +296bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +7 basis points to  +416bps over bmk*
5-yr T-bond   PL5YT=RR    -1 basis points to  +346bps over bmk*
10-yr T-bond PL10YT=RR   +2 basis points to  +305bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -16 basis points to  +883bps over bmk*
5-yr T-bond   HU5YT=RR    -23 basis points to  +824bps over bmk*
10-yr T-bond   HU10YT=RR  -19 basis points to  +735bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1740 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/Marius
Zaharia; editing by Stephen Nisbet)