CEE MARKETS 2-FX move sideways as dollar slips

                                
 * Currencies move sideways in slow trade
                                
 * Polish, Czech rates could be cut still further
                                
 * Hungary seeks higher 2009 deficit target -report
                                
 
(Adds bonds, new comments, updates prices)
                                
 By Balazs Koranyi and Gergely Szakacs
                                
 BUDAPEST, May 13 (Reuters) - Central Europe's currencies
were broadly unchanged early on Wednesday and dealers expect
limited movement pending major data due later this week.
                                
 The dollar's overnight weakening versus the euro <EUR=>,
often seen as a sign of rising risk appetite, could provide some
room for emerging markets to gain but any movement is likely to
be small.
                                
 The dollar reached four-month lows against a basket of
currencies, hitting 1.37 against the euro [ID:nT237951].
                                
 "As soon as the EUR/USD falls back down a bit, futures turn
negative and the forint will lose ground as well," a dealer in
Budapest said. "I don't expect much news until Friday."
                                
 The Czech Republic, Hungary and Romania will all release
first quarter gross domestic product figures on Friday while
Poland and Romania will release current account figures.
                                
 The data will shed light on how well the region's economies
are coping with the global downturn and how their financing
abilities have shifted.
                                
 The forint <EURHUF=> was flat, shrugging off a report in
business daily Vilaggazdasag that the government may broker a
deal with the International Monetary Fund for a higher budget
deficit this year to facilitate a faster recovery.
                                
 Hungary's 2009 budget deficit target could be raised to 3.9
percent of gross domestic product from 2.9 percent as a result
of talks between the government, the EU and the IMF, the report
said. [ID:nLD503478]
                                
 Dealers said the report was market neutral.
                                
 "They have been pushing for this for a while now," a
currency dealer in Budapest said. "So I don't think it would
surprise anybody very much. In contrast to other countries, this
is still a very low (deficit target)."
                                
 In Poland and the Czech Republic, currencies were unfazed by
news that interest rates could be lowered still further as
central Europe's once booming economies combat a steadily
deepening downturn.
                                
 The Czech central bank (CNB) cannot rule out further
interest rate reductions if price pressures continue to
accumulate on the downside, Vice-Governor Miroslav Singer said
in a May 12 presentation released on Wednesday [ID:nPRG001419].
                                
 The central bank cut the main repo rate by 25 basis points
last week to an all-time low of 1.50 percent.
                                
 The crown <EURCZK=> was hardly changed, shedding 0.05
percent from its Tuesday close versus the euro.
                                
 In Poland, there is 50-50 chance that central Europe's
biggest economy would see a recession in 2009 and interest rates
may still need to be lowered further, Monetary Policy Council
member Jan Czekaj said [ID:nLD726086].
                                
 Poland, the biggest ex-communist European Union member, is
fighting a sharp slowdown and Warsaw said it would downgrade its
economic forecasts in this year's budget in July.
                                
 The central bank forecasts growth of 1.1 percent in 2009 and
government sources told Reuters recently Warsaw now saw this
year's economic expansion at 0.5-1.3 percent -- down from 1.7
expected in the government's previous 'worst case scenario'.
                                
 The zloty <EURPLN=> was down 0.07 percent versus the euro.
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   26.757   26.744   -0.05%   -0.01%
Polish zloty     <EURPLN=>    4.395    4.392   -0.07%   -6.37%
Hungarian forint <EURHUF=>  279.31   279.3      0%      -5.64%
Croatian kuna    <EURHRK=>    7.348    7.35    +0.03%   +0.23%
Romanian leu     <EURRON=>    4.154    4.145   -0.22%   -3.36%
Serbian dinar    <EURRSD=>   94.95    94.745   -0.22%   -5.76%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -13 basis points to  154bps over bmk*
4-yr T-bond   CZ4YT=RR    -3 basis points to  +196bps over bmk*
8-yr T-bond   CZ8YT=RR    +4 basis points to  +280bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -22 basis points to  +846bps over bmk*
5-yr T-bond   HU5YT=RR    -57 basis points to  +780bps over bmk*
10-yr T-bond   HU10YT=RR  -48 basis points to  +650bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1031 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
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 (Reporting by Reuters bureaus, writing by Balazs Koranyi and
Gergely Szakacs)