CEE MARKETS 2-Currencies steady as sentiment starts to weigh

                                
 PRAGUE, Sept 23 (Reuters) - Poland's zloty and Hungary's
forint held steady against the euro on Tuesday despite a turn
for the worse in global sentiment as markets started counting
the costs of a U.S. government bank bailout plan.
                                
 Markets have been battered in recent weeks as the year-old
credit crunch worsened, causing wide swings and sending many
investors to the sidelines in central Europe.
                                
 Dealers expected thin trade on Tuesday as markets started to
eye central bank meetings this week and next, starting with
Poland's central bank on Wednesday, which is expected to leave
interest rates unchanged and then raise them later this year.
                                
 The zloty <EURPLN=> inched down 0.1 percent to 3.299 versus
the euro by 0819 GMT, and the Hungarian forint <EURHUF=> gained
0.2 percent to 239.97 per euro.
                                
 The Czech crown <EURCZK=> lagged the region in illiquid
trade, falling 0.8 percent from Monday's domestic close to
24.056 per euro, but still near the psychological 24.00 level.
                                
 Romania's leu <EURRON=> also dropped 0.9 percent to 3.65 to
the euro.
                                
 The zloty has gradually firmed since Poland earlier this
month announced plans it would ready itself for euro adoption,
which raised expectations Poland's central bank would need to
tighten monetary policy to combat high inflation.
                                
 Dealers also said the dollar's weakening against the euro
could add to zloty gains. The dollar's losses against the euro
often helps regional currencies as dealers track euro/dollar
moves.
                                
 "The zloty is likely to strengthen further (today), even to
3.25 against the euro due to falling dollar," said Jan
Koprowski, dealer at BNP Paribas.
                                
 In fixed income, Polish bonds opened stronger at the long
end of the curve, while in Hungary, bonds weakened slightly with
yields up two to three basis points.
                                
 "I think it should be quiet today as investors await
(Poland's) rate decision and the statement afterwards," said
Marek Kaczor, dealer at PKO BP bank in Warsaw.
                                
 However, growing concern about the cost of the United
States' $700 billion bank bailout package will likely weigh on
the region, some dealers said.
                                
 "It's not positive for today, as ... (global) sentiment was
very negative (yesterday) so that should take its toll on us as
well," a Budapest currency dealer said.
                                
 In Croatia, the kuna <EURHRK=> edged down to 7.114 from
7.111 per euro, while Serbia's dinar <EURRSD=> was 0.2 percent
down at 76.31 to the euro.
                                
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2008 
Czech crown      <EURCZK=>   24.056   23.851  -0.86%   +9.21%
Polish zloty     <EURPLN=>    3.299    3.295  -0.12%   +8.37%
Hungarian forint <EURHUF=>  239.970  240.480  +0.21%   +5.09%
Croatian kuna    <EURHRK=>    7.114    7.111  -0.04%   +2.9%
Romanian leu     <EURRON=>    3.655    3.622  -0.91%   -2.09%
Serbian dinar    <EURRSD=>   76.310   76.178  -0.17%   +3.11%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR   +1 basis points to   1bps over bmk*
5-yr T-bond   CZ5YT=RR   +5 basis points to  -12bps over bmk*
10-yr T-bond  CZ9YT=RR   +3 basis points to  +29bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +7 basis points to  +239bps over bmk*
5-yr T-bond   PL5YT=RR    3 basis points to  +189bps over bmk*
10-yr T-bond  PL10YT=RR  -1 basis points to +161bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +10 basis points to +515bps over bmk*
5-yr T-bond   HU5YT=RR   +7 basis points to  +474bps over bmk*
10-yr T-bond  HU10YT=RR  +5 basis points to  +366bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1019 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.
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 (Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Mike Peacock)