CEE MARKETS 2-FX mixed, Polish zloty weaker as options expire

                                
 (adds fixed income, details, updates prices)
                                
 By Marius Zaharia
                                
 BUCHAREST, Dec 19 (Reuters) - Central European currencies
were mixed in thin and volatile early trade on Friday, with the
Polish zloty marching again towards a 2-1/2 year low hit on
Thursday as hedging worries continued.
                                
 The zloty plunged in the past weeks on worries over
companies that hedged the wrong way in the summer when the unit
was firming, and with a worse-than-expected industrial output
data adding to the gloom and raising rate cut expectations.
 At 0943 GMT, the unit <EURPLN=> was 0.8 percent down at
4.123 per euro in volatile trading.
                                
 "As on every third Friday of the last month of the quarter
it is the day when three types of derivate contracts expire -
futures on indexes, options on indexes and options on shares -
this may have impact on high volatility on the FX market," BPH
said in a client note.
                                
 In contrast, the Warsaw bourse <.WIG20> is seen having a
quiet session after the exchange tightened trading limits to a
5-percent range from the usual 10 percent, on worries over the
expiration of future contracts. 
                                
 The main WIG20 index was 0.3 percent down.
                                
 In Czech Republic, the crown <EURCZK=> gave up earlier gains
to trade 0.46 percent weaker at 26.42 per euro in quiet trade,
while in Hungary, the forint <EURHUF=> was up 0.34 percent at
265.61 per euro.
                                
 Many dealers said relatively high volatility in emerging
Europe's markets was caused by thinner pre-Christmas volumes.
                                
 "We clearly see markets moving into holidays, so everybody
that might have been slightly long (euro) and do not want to
take positions over to the holidays are closing now," said
Ulrich Leuchtmann, head of foreign exchange research at
Commerzbank in Frankfurt.
                                
 The Romanian leu <EURRON=> traded a notch firmer as the
market was neutral on the in-waiting prime minister Emil Boc's
proposal for the country's next finance minister, Gheorghe
Pogea, a relatively unknown figure.
                                
 Pogea told Reuters the final version of the governing
programme which is expected to be released later in the day sees
the 2009 budget deficit at 1.7 percent of GDP from 2.5 percent
in a draft posted earlier this week [ID:nBUC001220].
                                
 Meanwhile, dealers said investors still feared central bank
intervention, rumoured to have been covertly intervening in the
past weeks to stem the leu fall, triggered mostly by uncertainty
on the future government's reforms.
                                
 "We expect the leu to consolidate around 3.95 level ... in
an environment where the risk of intervention from the central
bank remains high," BNP Paribas said in a note.
                                
 Debt markets remained quiet, succumbing to a holiday lull,
and waiting for rate moves in Hungary and Poland next week.
                                
 "It is very quiet - I haven't seen any trades," said Olgierd
Zieblinski, fixed-income dealer at Rabobank in Warsaw. "I think
the rate cut by 50 basis points in December has already been
priced in."
                                
 Mounting expectations for a new wave of rate cuts have been
weighing on regional currencies in recent weeks, as recession is
showing its teeth to the east, after biting the euro zone.
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2008 
Czech crown      <EURCZK=>  26.42    26.3    -0.46%   +0.29%
Polish zloty     <EURPLN=>   4.123    4.09   -0.81%  -14.51%
Hungarian forint <EURHUF=> 264.71   265.61   +0.34%   -4.69%
Croatian kuna    <EURHRK=>   7.244    7.237  -0.1%    +1.13%
Romanian leu     <EURRON=>   3.944    3.95   +0.15%  -10.16%
Serbian dinar    <EURRSD=>  85.59    85.991  +0.47%   -8.67%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR   +1 basis points to  160bps over bmk*
5-yr T-bond   CZ5YT=RR    0 basis points to  +147bps over bmk*
10-yr T-bond   CZ9YT=RR   +10 basis points to  +127bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -8 basis points to  +351bps over bmk*
5-yr T-bond   PL5YT=RR   +1 basis points to  +305bps over bmk*
10-yr T-bond PL10YT=RR    -1 basis points to  +256bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +41 basis points to  +796bps over bmk*
5-yr T-bond   HU5YT=RR   +31 basis points to  +736bps over bmk*
10-yr T-bond   HU10YT=RR +49 basis points to  +572bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1143 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.
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 (Reporting by Reuters bureaus, Writing by Marius Zaharia;
Editing by Tony Austin)