CEE MARKETS 2-FX up on weak dollar, leu hits 8-month high

                                
 * Leu at 8-mth high, investors look to its carry
                                
 * Zloty around 5-wk high, further gains seen
                                
 * Bonds mixed, Polish up on eurobond plan
                                
 
                                
 (Adds fixed income, fresher quote)
                                
 By Dagmara Leszkowicz
                                
 WARSAW, Jan 11 (Reuters) - The Romanian leu rose to an
eight-month high on Monday and the Polish zloty touched a
five-week peak as central Europe's currencies were lifted by
improving output and trade data along with a weaker dollar.
                                
 Romania's trade deficit shrank 60 percent in the January to
November period, data showed, with a decline in imports
outpacing exports.
                                
 A recovery in export markets is expected to help fuel demand
for central European currencies this year, despite first half
gains being tempered by upcoming elections in Hungary, Poland
and the Czech Republic, along with fiscal questions.
                                
 The leu has been the best performing central European
currency to start 2010, lifted by the highest interest rates in
the region and expectations the passing of an austere 2010
budget bill will free up International Monetary Fund aid.
                                
 The leu <EURRON=> rose to bid at 4.135 to the euro by 1124
GMT, up 0.6 percent from Friday. [ID:nLDE60A0CM] [ID:nLDE6090FS]
                                
 "The leu is in favour since the country's political
situation stabilised a little and...breaking a level of 4.15 to
the euro paves the way to its further strengthening," said
Bartosz Pawlowski, FX strategist at BNP Paribas.
                                
 "Though I think it is likely to lose impetus when it reaches
4.10."
                                
 Some dealers also said there is now more activity on
regional trades using the crown as Czech interest rates are the
lowest in the region. The crown <EURCZK=> was 0.3 percent up on
Monday at 26.165 per euro after neutral inflation data showing
rates would not likely go lower. [ID:nLDE60A07Z]
                                
 "There are more people going long leu against the crown," a
Prague dealer said. "It is still tricky as the Romanian economy
is still fragile and you could get hurt"
                                
 
                                
 SUPPORT
                                
 In Poland, the only country in emerging Europe to avoid
recession last year, the zloty tested new levels, rising to the
strong side of 4.05 to the euro before easing a touch. Some
dealers said 4.0 per euro was a next target level.
                                
 Elsewhere, Hungary's forint was a touch up at 266.6 to the
euro after data showing the country posted a 4.2 billion euros
trade surplus in the first 11 months of 2009. [ID:nLDE60A0BK]
                                
 The dollar's rise, which had weighed on the region, reversed
last week after weaker-than-expected U.S. jobs data. Stronger
economic signals from the region have also helped.
                                
 A top aide to Polish Prime Minister Donald Tusk said the
economy expanded by 1.6 percent in 2009. [ID:nLDE60A0AM]
                                
 Polish bond yields dropped 5-7 basis points following news
the state may sell as much as 3 billion euros of a planned
15-year euro bond, easing local pressure. [ID:nLDE60A0UB]
                                
 Czech bonds mostly paused from recent weakening on investor
positioning for expected heavy debt issuance in the first half.
                                
 Gross borrowing in the country is set to stay at record
levels due to rising debt costs, leaving issuance heavy and
putting pressure on yields.

--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2010 
Czech crown      <EURCZK=>   26.165   26.253  +0.34%   +0.58%
Polish zloty     <EURPLN=>    4.053    4.066  +0.32%   +1.26%
Hungarian forint <EURHUF=>  266.58   267.54   +0.36%   +1.41%
Croatian kuna    <EURHRK=>    7.291    7.291   0%      +0.25%
Romanian leu     <EURRON=>    4.135    4.161  +0.63%   +2.48%
Serbian dinar    <EURRSD=>   97.27    97.37   +0.1%    -1.43%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR   +1 basis points to  65bps over bmk*
7-yr T-bond   CZ7YT=RR    -2 basis points to  +100bps over bmk*
10-yr T-bond   CZ10YT=RR    -1 basis points to  +95bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -5 basis points to  +385bps over bmk*
5-yr T-bond   PL5YT=RR    -6 basis points to  +330bps over bmk*
10-yr T-bond PL10YT=RR    -7 basis points to  +271bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1225 CET.
Currency percent change calculated from the daily domestic 
close at 1700 GMT.

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 (Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz, editing by Stephen Nisbet and Toby Chopra)