CEE MARKETS 3-FX slip led by zloty; leu steady after cbank

                                
 * FX down after recent rally
                                
 * Romania's c.bank surprises with 50 bps cut
                                
 * Solid demand greets Polish, Czech bond sales
                                
 
  (Updates with Romania cbank, bond sales)
                                
 By Dagmara Leszkowicz and Jason Hovet
                                
 WARSAW/PRAGUE, May 6 (Reuters) - Central Europe's currencies
mostly fell back on Wednesday after a rally ran up against a
wall this week, but the Romanian leu held steady after a
surprise half percentage point interest rate cut.
                                
 Currencies have jumped over the past month along with
improving sentiment for emerging markets, with the Hungarian
forint nearing a 3-1/2 month high this week and the leu touching
a three-week peak.
                                
 But investors have turned cautious in the run-up to stress
test releases on U.S. banks later this week and as data in
central Europe points to tough economic times ahead. Central
European bourses, though, bucked the trend to gain more than 1
percent.
                                
 Romania's central bank cut interest rates more than expected
by 50 basis points on Wednesday over worries of a falling
economy, winning some breathing space after a 20 billion euro
IMF-led aid package last month. [ID:nL6153588]
                                
 The leu <EURRON=> edged up 0.1 percent to 4.153 to the euro.
                                
 "The decision is largely because the IMF made available
foreign currency support," said Barbara Nestor of Commerzbank in
London. "It is more likely to see the currency stabilising,
despite the rate cut, because the IMF impact is much stronger."
                                
 But other currencies fell, led by the Polish zloty <EURPLN=>
with a 0.9 percent fall on the day, bidding at 4.408 against the
euro by 1345 GMT. 
                                
 The Hungarian forint <EURHUF=> fell to 284.55 to the euro,
down 0.3 percent, and the Czech crown <EURCZK=> dropped 0.7
percent to 26.797 per euro.
                                
 "There are concerns about these U.S. stress tests (on banks)
which did create a weaker backdrop for emerging Europe today,"
said UniCredit emerging strategist Martin Blum. 
                                
 "The bottom line is a lot of these eastern European
currencies had rallied quite significantly in the previous few
weeks, and I think at these levels... it will prove increasingly
difficult to drive eastern European currencies stronger."
                                
 
                                
 GOOD DEBT
                                
 The zloty and Hungarian forint have led gains with almost 4
percent rises since April 27. Romania's leu has gained 1.4
percent in that time.
                                
 Central European debt continued to get strong investor
demand, with Poland selling 766 million zlotys worth of bonds at
a switch tender on Wednesday. [ID:nL6983116]
                                
 In the Czech Republic, demand stayed solid at the first
domestic auction since selling a euro-denominated bond on
international markets last week. [ID:nL6641296]
                                
 Hungary's debt agency bought back fewer bonds than in
previous weeks ahead of a debt auction on Thursday.
                                
 "The repurchases are losing steam as the auction showed," a
trader said. "Tomorrow's (bond sale) auctions will provide the
market with some indications about the future."
                                
 Darker economic outlooks in central Europe, widening fiscal
gaps and easier monetary policies are set to keep pressure on
currencies in coming months, although strategists don't expect
the wide swings seen earlier this year that sent units crashing.
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   26.797   26.62   -0.66%    -0.16%
Polish zloty     <EURPLN=>    4.408    4.369  -0.88%    -6.65%
Hungarian forint <EURHUF=>  284.55   283.75   -0.28%    -7.38%
Croatian kuna    <EURHRK=>    7.365    7.405  +0.54%     0%
Romanian leu     <EURRON=>    4.153    4.158  +0.12%    -3.34%
Serbian dinar    <EURRSD=>   94.609   94.72   +0.12%    -5.42%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +10 basis points to  177bps over bmk*
4-yr T-bond   CZ4YT=RR   +5 basis points to  +201bps over bmk*
8-yr T-bond   CZ8YT=RR   +10 basis points to  +294bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +7 basis points to  +867bps over bmk*
5-yr T-bond   HU5YT=RR    -1 basis points to  +793bps over bmk*
10-yr T-bond   HU10YT=RR  -2 basis points to  +689bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1547 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news [EMRG] 
Spot FX rates Eastern Europe spot FX <EEFX=>    
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>       
Latin America spot FX <LATAMFX=> 
Other news and reports   
World central bank news [CEN]  Economic Data Guide <ECONGUIDE>
Official rates [GLOBAL/INT]  Emerging Diary [EMRG/DIARY]  
Top events [M/DIARY]  Diaries [DIARY] Diaries Index [IND/DIARY] 
 (Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz/Jason Hovet, editing by Stephen Nisbet))