CEE MARKETS 4-Currencies gain in pre-holiday trading

                                
 (Updates prices, adds quote)
                                
 By Jason Hovet and Marius Zaharia
                                
 PRAGUE/BUCHAREST, Dec 19 (Reuters) - Poland's zloty rose
against the euro on Friday, regaining some ground but near
multi-year lows, as investors closing long-euro positions gave a
pre-holiday boost to central Europe's currencies.
                                
 Data this week gave more indications the global economic
slide will take a heavier toll on the region's economies,
putting pressure on currencies.
                                
 The zloty has been especially hit, falling to a 2-1/2 year
low with worries over fallout from corporate forex options that
soured when the currency reversed from all-time highs over the
summer also weighing.
                                
 Dealers and analysts expect more weakening on the cards, but
levels were moved stronger in the final full trading week before
Christmas holidays, with the zloty <EURPLN=> adding 1 percent to
4.085 per euro by 1536 GMT.
                                
 Romania's leu <EURRON=> rose to 3.93 per euro, up 0.7
percent, while Hungary's forint <EURHUF=> gained 0.6 percent to
264.6 and the Czech crown <EURCZK=> inched up to 26.38.
                                
 "It's been a tough week for the region and now investors are
closing long-euro positions ahead of the weekend at least, if
not ahead of the holidays," one London-based dealer said, adding
liquidity remained thin add to gains.
                                
 The zloty has shed 15 percent since the start of November,
and on Friday the Polish central bank governor said zloty falls
were not justified by fundamentals [ID:WAR007721]. 
                                
 Mounting expectations for a new wave of rate cuts have built
as recession shows its teeth to the east, after biting the euro
zone, which is one of the main buyers of the region's exports.
                                
 The Czechs cut interest rates this week to the lowest since
July 2006. Hungary's central bank will likely ease by 50 basis
points next week to go along cuts of 100 basis points in the
past month [ID:nLH403417], and Poland is expected to cut another
quarter percentage point.
                                
 Bond markets were quiet on Friday with the next week's
decisions looming and largely priced in already, dealers said.
                                
 "Subdued activity and dry liquidity on both foreign exchange
and fixed income markets should characterize the very few
working days ahead," Erste Bank analyst Orsolya Nyeste said in a
note.
                                
 In Romania, 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.
                                
 Romania's new centre-left coalition pledged on Friday to
slash its budget deficit next year in a bid to protect the
country from global crisis, but economists said its new targets
were unrealistic. [nLJ704634]
                                
 The parliament is expected to endorse the new cabinet on
Monday.
                                
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2008 
Czech crown      <EURCZK=>   26.382   26.46   +0.29%   +0.43%
Polish zloty     <EURPLN=>    4.085    4.124  +0.95%   -13.46%
Hungarian forint <EURHUF=>  264.59   266.15   +0.59%   -4.64%
Croatian kuna    <EURHRK=>    7.237    7.237   0%      +1.22%
Romanian leu     <EURRON=>    3.929    3.955  +0.66%   -9.74%
Serbian dinar    <EURRSD=>   85.861   85.981  +0.14%   -9.02%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR    -3 basis points to  157bps over bmk*
5-yr T-bond   CZ5YT=RR   +3 basis points to  +151bps over bmk*
10-yr T-bond   CZ9YT=RR   +1 basis points to  +117bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    0 basis points to  +361bps over bmk*
5-yr T-bond   PL5YT=RR    0 basis points to  +305bps over bmk*
10-yr T-bond PL10YT=RR    0 basis points to  +258bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +6 basis points to  +767bps over bmk*
5-yr T-bond   HU5YT=RR    -11 basis points to  +705bps over bmk*
10-yr T-bond   HU10YT=RR  -9 basis points to  +533bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1639 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
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 (Reporting by Reuters bureaus, Writing by Marius Zaharia and
Jason Hovet)