CEE MARKETS 2-Region slips on flight to safe havens

                                
 (Adds details, fixed income)
                                
 PRAGUE, Sept 30 (Reuters) - Emerging European currencies and
stock markets fell on Tuesday as investors fled for safer assets
after U.S. lawmakers surprisingly rejected a financial markets
bailout plan.
                                
 Currencies recouped some early losses by 0911 GMT after
trading at some of their lowest points this month.
                                
 Poland's zloty <EURPLN=> dropped 0.8 percent to 3.408 versus
the euro, while the Czech crown <EURCZK=> was down 0.7 percent
from Monday's domestic close to 24.723 per euro.
                                
 The escalating 13-month credit crunch has hit central
European markets in recent weeks, limiting flows into regional
assets and curbing risk appetite.
                                
 "We expect the market environment to remain one of extreme
risk aversion and illiquidity," analysts at UBS wrote in a
morning note.
                                
 The U.S. House of Representatives rejected a plan late on
Monday to buy up toxic assets from banks, sending global markets
steeply lower as investors sought safe havens.
                                
 The news sent Wall Street to its biggest one-day fall since
1987 in Monday trade. Central European stock markets opened
sharply down on Tuesday, led by an initial 6 percent drop on
Prague's main index <.PX> to its lowest since point May 2005.
                                
 Among other currencies, Hungary's forint <EURHUF=> fell 0.4
percent to 243.4 per euro and Romania's leu <EURRON=> shed 1
percent to 3.74.
                                
 "The zloty, the crown and the leu are all falling, while the
forint has been relatively resilient this morning, but I think
there's no doubt about the direction on anybody's mind," a
Budapest trader said. "Dollar lending rates are sky-high, (and)
the liquidity scare is continuing."
                                
 Bad debt at U.S. and European banks has paralysed money
markets, although central Europe has been largely insulated.
                                
 Interbank lending rates in the region have ticked up this
month since U.S. investment bank Lehman Brothers Holding filed
for bankruptcy protection, pushing markets into a free fall and
forcing U.S. officials to push ahead with a banking rescue plan.
                                
 But dealers said regional money markets have stayed
resilient in the face of a freeze in interbank lending in euro
and dollar markets.
                                
 "The Czech money market is still in better shape than in
euros or dollars," a Prague trader said.
                                
 In regional fixed income, Hungarian government bond yields
rose sharply across the curve early on Tuesday, in line with
losses in the forint currency and tracking continued falls in
global markets.
                                
 Traders said Hungarian bond yields jumped by 20-25 basis
points on all maturities at the opening, while Polish and Czech
bonds remained stable.
 ----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2008 
Czech crown      <EURCZK=>   24.723   24.548  -0.71%   +6.7%
Polish zloty     <EURPLN=>    3.408    3.380  -0.83%   +5.35%
Hungarian forint <EURHUF=>  243.360  242.550  -0.33%   +3.75%
Croatian kuna    <EURHRK=>    7.108    7.104  -0.06%   +2.98%
Romanian leu     <EURRON=>    3.740    3.704  -0.97%   -4.46%
Serbian dinar    <EURRSD=>   76.664   76.528  -0.18%   +2.66%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR    -8 basis points to  31bps over bmk*
5-yr T-bond   CZ5YT=RR    -4 basis points to  +24bps over bmk*
10-yr T-bond  CZ9YT=RR    -2 basis points to  +35bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    0 basis points to   +285bps over bmk*
5-yr T-bond   PL5YT=RR   +-6 basis points to  +228bps over bmk*
10-yr T-bond  PL10YT=RR  +14 basis points to  +200bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +8 basis points to   +614bps over bmk*
5-yr T-bond   HU5YT=RR   +10 basis points to  +553bps over bmk*
10-yr T-bond  HU10YT=RR  +9 basis points to   +422bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1111 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)