CEE MARKETS 4-Crown just up after 25 bps rate cut, others down

                                
 * Czech crown slightly up after 25 bps rate cut
                                
 * Hungarian output fall slows, Czech trade in surplus
                                
 * Zloty seen to lead gains over next 12 months
                                
 
  (Updates prices)
                                
 By Jason Hovet and Dagmara Leszkowicz
                                
 PRAGUE/WARSAW, Aug 6 (Reuters) - The Czech crown shook off a
quarter point rate reduction on Thursday, with the cut in the
premium for investing in the currency offset by positioning
ahead of the decision and hopes it would help boost growth.
                                
 A slim majority of analysts had expected the bank to hold
fire, and dealers said many investors had been positioned behind
a cut. They also said the market now expected the bank to signal
its easing cycle was at an end.
                                
 The crown <EURCZK=> dipped after the decision to cut rates
to a new low of 1.25 percent, but soon rebounded to bid stronger
at 25.9 to the euro. The currency had fallen 1.5 percent this
week on speculation by some investors of a reduction.
                                
 Czech bonds were little changed, and dealers said the crown
was also supported by strong resistance at around 26 to the
euro.
                                
 "I would expect this will be the last step in the easing
cycle because 'green shoots' in the Czech economy are more and
more visible," Patria Finance chief economist David Marek said.
                                
 "It may be motivated by the forex (rate), not to allow the
crown to begin an appreciation rally again and possibly threaten
recovery of Czech exports and economy."
                                
 The country's central bank said it voted unanimously to cut
rates to a new record low and it saw the economic fall in the
Czech Republic hitting the bottom in the second quarter.
[ID:nPRG001524]
                                
 
                                
 WEAKER TONE
                                
 The Czech decision follows interest rate cuts in Romania and
Hungary, both to 8.5 percent, in the past two weeks. Poland,
which like the Czechs has cut to record lows, left interest
rates on hold at 3.5 percent last week.
                                
 The Polish zloty <EURPLN=>, which has gained more than 5
percent since the start of July, was down 0.6 percent from
almost seven-month highs, bidding at 4.14 versus the euro by
1441 GMT.
                                
 "The recent weakening (of the zloty) is a short correction
as we still expect the Polish unit to strengthen further," said
one Warsaw-based analyst.
                                
 The zloty, driven by stronger domestic fundamentals than
peers in the region, is expected to hold recent strong gains
versus the euro and to add more by next summer, a Reuters poll
of analysts showed on Thursday. [ID:nL5168081]
                                
 At the same time the Czech currency is seen rising nearly 4
percent in the next 12 months, while the forint is expected to
give up some 2 percent in the next 3 months and then stay flat.
                                
 
                                
 CEE "GREEN SHOOTS"
                                
 Hungary's forint <EURHUF=> was 0.4 percent down at 269.33 to
the euro, and the Romanian leu <EURRON=> eased to 4.20. 
                                
 Stocks in the region were mostly in the black, with Prague's
bourse adding 2.1 percent behind banking gains as the results
season proved better than expected.
                                
 The Prague index <.PX> has added 27 percent since July 1,
and posted its largest monthly gain this decade in July.
                                
 Promising signs for the global economy have pushed investors
to add more riskier assets to portfolios in the past month,
providing impetus to central Europe's assets.
                                
 On Thursday, Czech trade data showed the double digit drop
in exports slowed in June, although imports fell more to put the
country's balance in surplus. [ID:nL6640358]
                                
 In Hungary, among the worst hit of central Europe's export
economies, the industrial drop slowed in June and showed a
second consecutive monthly rise. [ID:nL657735]
 ----------------------MARKET SNAPSHOT-------------------------
 Currency                    Latest   Previous Local    Local
                                
                                   close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  25.9    25.952   +0.2%     +3.29%
Polish zloty     <EURPLN=>   4.14    4.117   -0.56%    -0.6%
Hungarian forint <EURHUF=> 269.33  268.4     -0.35%    -2.15%
Croatian kuna    <EURHRK=>   7.334   7.339   +0.07%    +0.42%
Romanian leu     <EURRON=>   4.2     4.197   -0.07%    -4.42%
Serbian dinar    <EURRSD=>  93.29   93.217   -0.08%    -4.08%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -20 basis points to  66bps over bmk*
4-yr T-bond   CZ4YT=RR   +28 basis points to  +152bps over bmk*
8-yr T-bond   CZ8YT=RR    -2 basis points to  +252bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -4 basis points to  +344bps over bmk*
5-yr T-bond   PL5YT=RR    -2 basis points to  +284bps over bmk*
10-yr T-bond PL10YT=RR    -4 basis points to  +264bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -23 basis points to  +674bps over bmk*
5-yr T-bond   HU5YT=RR    -60 basis points to  +609bps over bmk*
10-yr T-bond   HU10YT=RR  -50 basis points to  +531bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1641 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.

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 (Reporting by Reuters bureaus, writing by Jason Hovet and
Dagmara Leszkowicz; editing by Stephen Nisbet)