CEE MARKETS 3-FX stronger in quiet trade, good mood remains

                                
 * FX stronger in thin trade due to U.S holidays
                                
 * Zloty within reach of 4.0 vs euro, dealers say
                                
 * IMF may give Romania more time on pension reform
                                
 
  (Updates throughout)
                                
 By Marius Zaharia and Dagmara Leszkowicz
                                
 BUCHAREST/WARSAW, Jan 18 (Reuters) - Central European
currencies rose on Monday in thin trade due to the U.S holidays
and the zloty could test 4.0 per euro soon, dealers say.
                                
 Central European currencies and bonds have been helped so
far this year by an improved outlook in the region and by a
higher appetite for carry trades, but worries over fiscal
imbalances and political risk related to elections may limit
gains.
                                
 "There's risk appetite among investors, the region is
constantly strengthening and we're already awaiting the zloty to
strengthen below 4.0 against the euro," one Warsaw-based dealer
said. 
                                
 "If nothing extraordinary appears, the zloty may hit 4.0 vs
euro even tomorrow."
                                
 Poland's zloty <EURPLN=> got additional support from the
central bank governor who said the bank would use all available
means to safeguard zloty stability.
                                
 Another central banker, new Monetary Policy Council (MPC)
member Andrzej Rzonca said it was very probable that interest
rates would be hiked by the end of 2010 [ID:nWAR011323].
                                
 At 1505 GMT, the zloty <EURPLN=> was 0.4 percent stronger
than on Friday afternoon and traded at 4.02 against the euro.
The Czech crown <EURCZK=> and Hungary's forint <EURHUF=> were up
0.3 percent and 0.2 percent to the euro respectively.
                                
 In Romania, the IMF said it would likely give Romania more
time to begin streamlining its pension system, a key anti-crisis
move, helping to get its 20 billion euro aid package on track.
[ID:nLDE60H138]
                                
 The IMF put the aid package on hold in November as political
deadlock froze reforms in the recession-hit economy and caused
the original end-December deadline to fix pensions to be missed.
                                
 The leu <EURRON=> was 0.1 percent stronger against the euro.
Romania's finance ministry sold a more than planned 2.4 billion
lei in one-year treasury bills with demand exceeding 6 billon
lei.[ID:nBUC003606]
                                
 Bonds were mixed with Poland's papers stronger ahead of a
Wednesday bond auction.
                                
 "Sentiment is still positive. The strengthening was caused
by good demand for Poland's t-bills and a stronger zloty," said
Krzysztof Izdebski, fixed income dealer at PKO BP in Warsaw.
                                
 Poland's finance ministry sold 638 million zlotys in its
52-week treasury bills with demand reaching almost 4 billion
zlotys. It will offer a total of 1.5-2.5 billion zlotys of
10-year and 20-year papers at Wednesday's tender.
                                
 Signalling improved funding conditions, the Swiss National
Bank said it will suspend fx swaps with Hungary and Poland next
week. Swap deals were made last year to provide Swiss franc
funding to banks when liquidity dried up [ID:nLDE60H0OY].
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  25.868   25.936  +0.26%   +1.74%
Polish zloty     <EURPLN=>   4.022    4.038  +0.4%    +2.04%
Hungarian forint <EURHUF=> 267      267.56   +0.21%   +1.25%
Croatian kuna    <EURHRK=>   7.281    7.285  +0.05%   +0.39%
Romanian leu     <EURRON=>   4.102    4.104  +0.05%   +3.3%
Serbian dinar    <EURRSD=>  96.781   96.84   +0.06%   -0.93%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR   +7 basis points to  85bps over bmk*
7-yr T-bond   CZ7YT=RR    -22 basis points to  +107bps over bmk*
10-yr T-bond   CZ10YT=RR   +6 basis points to  +123bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +1 basis points to  +386bps over bmk*
5-yr T-bond   PL5YT=RR   +1 basis points to  +322bps over bmk*
10-yr T-bond PL10YT=RR   +2 basis points to  +286bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -1 basis points to  +537bps over bmk*
5-yr T-bond   HU5YT=RR   +1 basis points to  +493bps over bmk*
10-yr T-bond   HU10YT=RR +2 basis points to  +439bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1505 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
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  (Reporting by Reuters bureaux, writing by Marius Zaharia and
Dagmara Leszkowicz; Editing by Andy Bruce/Ruth Pitchford)