CEE MARKETS 2-FX mostly stronger but Greece worries remain

                                
 * FX mostly stronger as risk appetite improves
                                
 * Worries over Greece remain, dealers say
                                
 * Rate differentiation may spur regional cross-plays
                                
 
                                
 (Adds fixed income, detail)
                                
 By Dagmara Leszkowicz
                                
 WARSAW, Feb 17 (Reuters) - Central European currencies
strengthened slightly on Wednesday, boosted by rebounding stock
markets and rising confidence about the global economic outlook,
with only Romania's leu losing ground.
                                
 But further gains may be limited and trade could be volatile
because of the uncertainty over Greece's ability to cut its
deficit, dealers said.
                                
 Despite worries about euro zone periphery states, currencies
in the region have gained since the start of the year, with
Poland's zloty rising more than 3 percent against the euro, while
Romania's leu has gained more than 2.5 percent and the Czech
crown is up almost 2 percent. 
                                
 Only Hungary's forint has bucked the trend and is down 0.4
percent so far this year.
                                
 Analysts say central European countries are in better shape
than euro zone periphery countries and government bond yields in
the region have not jumped at the pace seen in Greece, Portugal
or Spain.
                                
 By 1041 GMT the forint <EURHUF=> and the crown <EURCZK=>
were up 0.2 percent against the euro. 
                                
 "It looks like risk appetite returned to the market, backed
by U.S. data and companies results," said one Warsaw-based
dealer.
                                
 The leu <EURRON=> dipped 0.2 percent.
                                
 The zloty <EURPLN=> was slightly higher, supported after
Adam Glapinski, a newly appointed member of the Polish central
bank's Monetary Policy Council (MPC) said on Tuesday that the
currency was undervalued. [ID:nWSF008717]. 
                                
  Other new Monetary Policy Council members appointed by the
Polish President on Tuesday could also support the Polish unit
as their comments were less dovish than markets had feared and
fuelled expectations interest rates may rise relatively soon.
[ID:nLDE61F154]
                                
 Central European stockmarkets were also in the black.
Warsaw's WIG20 <.WIG20> jumped 2 percent after U.S. stocks
posted their biggest daily percentage gain in three months on
Tuesday on the back of rising confidence in the economic
outlook.
                                
 In the bond market, Poland sold 2 billion zlotys in 10-year
paper maturing in 2019 with demand at 5.6 billion zlotys.
[ID:nWSF008720]
                                
 Analysts see Polish and Czech policymakers reversing
monetary easing cycles dating back to 2008 later this year and
expect Polish interest rates to be on the rise in the second
half.
                                
 By contrast, Hungary and Romania's central banks are still
expected to ease lending conditions this year after financial
turmoil in 2009 delayed cutting interest rates and some traders
say this differentiation may encourage intra-region cross plays.
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  25.939   25.984   +0.17%   +1.46%
Polish zloty     <EURPLN=>   3.985    3.986   +0.03%   +2.99%
Hungarian forint <EURHUF=> 271.13   271.72    +0.22%   -0.29%
Croatian kuna    <EURHRK=>   7.292    7.314   +0.3%    +0.24%
Romanian leu     <EURRON=>   4.12     4.113   -0.17%   +2.85%
Serbian dinar    <EURRSD=>  98.36    98.23    -0.13%   -2.52%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR   +4 basis points to  98bps over bmk*
7-yr T-bond   CZ7YT=RR   +3 basis points to  +141bps over bmk*
10-yr T-bond   CZ10YT=RR    -5 basis points to  +121bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -1 basis points to  +389bps over bmk*
5-yr T-bond   PL5YT=RR    -1 basis points to  +327bps over bmk*
10-yr T-bond PL10YT=RR    -2 basis points to  +291bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -2 basis points to  +551bps over bmk*
5-yr T-bond   HU5YT=RR    -1 basis points to  +502bps over bmk*
10-yr T-bond   HU10YT=RR  -2 basis points to  +450bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1041 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 Mike Peacock, Susan Fenton)