CEE MARKETS 3-Forint down, decouples as other FX flat to higher

                                
 * Forint extends losses on S&P warning
                                
 * Zloty gains on German Ifo, Polish retail sales data
                                
 * Bonds mixed, Hungarian paper hit by agencies' comments
                                
 
                                
(Updates with S&P revision)
                                
 By Marton Dunai and Dagmara Leszkowicz
                                
 BUDAPEST/WARSAW, July 23 (Reuters) - Hungarian assets fell
on Friday as fallout from a row with international lenders
worsened, while neighbouring countries' shares and currencies
were mostly flat to higher, tracking broader European trends.
                                
 The forint extended losses against the euro and Hungarian
stocks and bonds fell as rating agency Standard & Poor's joined
rival Moody's in cutting the country's credit outlook to
negative after its prime minister snubbed the IMF and rejected
calls for more austerity measures.
                                
 "Others may have high deficits, but we have been a problem
country and we have not climbed out of that category yet. Now
investors have become unsure about our fiscal trajectory," said
MKB Bank analyst Zsolt Kondrat.
                                
 "This bunch of news is Hungary specific, no doubt about it."
                                
 S&P said key components of the government's fiscal
consolidation plan could prove harmful to Hungary's medium-term
growth prospects, while Moody's said Hungary's failure to agree
loan conditions with the IMF and EU eroded frail trust in the
government's fiscal responsibility. [ID:nWLA9125][ID:nLDE66M0EI]
                                
 "As long as this battles continues, (forint) weakening to
292 (to the euro) is possible," said Karol Zaluski, chief dealer
at ING bank in Warsaw.
                                
 The Hungarian currency <EURHUF=> was 0.4 percent lower
against the euro by 1205 GMT. The country's 5-year cost of
insuring debt jumped some 14 basis points to 343 basis points.
Also bonds suffered and yields rose about 5 basis points.
                                
 Budapest stocks <.BIX> were down 1.1 percent at 1257 GMT,
while the Prague bourse <.PX> gained 0.2 pct and Warsaw <.WIG>
rose 0.3 pct.

                                
 ZLOTY RALLIES
                                
 The Polish zloty <EURPLN=> gained 0.5 percent and traded
close to a one-week high on the back of a better than expected
Ifo index in Germany and much better Polish retail sales data
for June. [ID:nLDE66M0OH]
                                
 Other currencies in the region were little changed.
                                
 Some dealers said a twin strategy of buying zlotys and
selling forints had recently found favour among investors.
                                
 Polish bonds also gained, with yields inching down some 2
basis points.
                                
 The Czech crown <EURCZK=> was virtually flat, and the
Romanian leu <EURRON=> fell slightly against the common
currency. The crown was seen firming further after it broke
through resistance at 25.270-25.300 on Thursday.
                                
 "We expect the crown to go up to 25.00 probably within a
week," a dealer in Prague said. "The euro/crown tends to live
its own life and does not react as much as the euro/zloty or
euro/forint to outside factors."
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2010 
Czech crown      <EURCZK=>  25.164   25.154  -0.04%    +4.59%
Polish zloty     <EURPLN=>   4.069    4.09   +0.52%    +0.86%
Hungarian forint <EURHUF=> 286.31   285.26   -0.37%    -5.57%
Croatian kuna    <EURHRK=>   7.243    7.239  -0.06%    +0.91%
Romanian leu     <EURRON=>   4.265    4.263  -0.05%    -0.65%

Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -4 basis points to  78bps over bmk*
7-yr T-bond   CZ7YT=RR    -7 basis points to  +101bps over bmk*
10-yr T-bond   CZ9YT=RR   +2 basis points to  +104bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -8 basis points to  +395bps over bmk*
5-yr T-bond   PL5YT=RR    -8 basis points to  +370bps over bmk*
10-yr T-bond PL10YT=RR    -6 basis points to  +314bps over bmk*

*Benchmark is German bond equivalent.
All data taken from Reuters at 1405 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
 
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(Reporting by Reuters bureaux, writing by Marton Dunai;
Editing by Toby Chopra, John Stonestreet)