CEE MARKETS 2-Zloty leads FX higher on rate hike views

                                
 * Polish inflation accelerated faster than expected in March
                                
 * C.bank governor comments now key for rate expectations
                                
 * Crown hits highest level since March 11
                                
 
 (Adds bonds, stocks, updated currency moves)
                                
 By Sam Cage
                                
 BUCHAREST, April 14 (Reuters) - Poland's zloty led emerging
Europe currencies higher in early trade on Thursday, extending
gains after inflation accelerated faster than expected in March,
fuelling expectations of higher interest rates next month.
                                
 Poland's Monetary Policy Council (MPC) has raised rates by
half a percentage point to 4 percent in two moves this year and
Wednesday's data suggested it would not now pause in its
tightening cycle, as some analysts had expected. [ID:nLDE73C1IQ]
                                
 The zloty <EURRON=> rose 0.5 percent to 3.948 per euro by
0931 GMT, adding to gains in the previous session and hitting
its highest level since February. 
                                
  "Statements from the central bank governor Marek Belka will
now be key for market expectations concerning the scale and
tempo of monetary policy tightening," BZ WBK analysts said in a
note.
                                
 Bond yields were stable, after gaining up to 6 basis points
on Wednesday, and Poland mandated Citi <C.N>, Goldman Sachs
<GS.N> and RBS <RBS.L> as lead managers on a 10-year dollar bond
worth at least $1 billion, Thomson Reuters news and market
analysis service IFR said. Pricing on the issue is expected
later on Thursday. [ID:nLDE73D0OI]
                                
 Warsaw stocks <.WIG> edged lower and other bourses in the
region were mixed.
                                
 The Czech crown <EURCZK=> firmed 0.3 percent to 24.29 per
euro, hitting its strongest level since March 11 after breaking
resistance at 24.350-24.370 and unfazed by a government crisis.
[ID:nPRG004875]
                                
 Czech President Vaclav Klaus is to meet government coalition
party leaders to discuss how and whether the government should
continue. [ID:nLDE73C29Q]
                                
 The latest political turmoil, following corruption and
conspiracy allegations within junior coalition partner Public
Affairs, has been blocking work on key economic reforms,
although markets have so far largely ignored the tensions.
                                
 But the threat of a government break-up has not been
entirely warded off and could potentially put upward pressure on
government bond yields and weaken the crown.
                                
 
                                
 LEU, FORINT ALSO RISE
                                
 Romania's leu <EURRON=> traded 0.2 percent stronger at 4.1
per euro before a tender for five-year debt at which analysts
expect good demand, with yields at about 7.32-7.40 percent.
                                
 "My guess is that the first leu target will be 4.08 (per
euro) if risk on remains the theme of the day," one dealer said.
                                
 Hungary sold 50 billion forints of 1-year treasury bills at
an auction at an average yield of 5.98 percent, a touch higher
than at the previous auction on March 31. [ID:nEAP000705]
                                
 The forint <EURHUF=> tracked the zloty higher and bond
yields were flat, consolidating recent gains.
                                
 "The past two days have seen healthy two-way flows from both
domestic and foreign players, but the sale side was slightly
stronger, that's what pushed yields higher from levels seen at
the start of the week," a fixed income trader said.
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2011 
Czech crown      <EURCZK=>   24.29   24.363   +0.3%   +2.92%
Polish zloty     <EURPLN=>   3.948    3.966  +0.46%   +0.25%
Hungarian forint <EURHUF=>   266.3      267  +0.26%   +4.39%
Croatian kuna    <EURHRK=>   7.366    7.364  -0.03%   +0.19%
Romanian leu     <EURRON=>     4.1    4.108   +0.2%   +3.24%
Serbian dinar    <EURRSD=>  101.28   101.34  +0.06%   +4.59%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    +1 basis points to   -8bps over bmk*
7-yr T-bond   CZ7YT=RR    +1 basis points to  +42bps over bmk*
10-yr T-bond   CZ9YT=RR   +2 basis points to  +57bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +2 basis points to  +327bps over bmk*
5-yr T-bond   PL5YT=RR   +9 basis points to  +309bps over bmk*
10-yr T-bond PL10YT=RR   +1 basis points to  +276bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   -1 basis points to  +442bps over bmk*
5-yr T-bond   HU5YT=RR   +7 basis points to  +415bps over bmk*
10-yr T-bond   HU10YT=RR  0 basis points to  +363bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1131 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
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 (Reporting by Reuters bureaus; editing by Stephen Nisbet)