CEE MARKETS 3-FX falls on risk aversion; politics drags

                                
 * Most FX weaken, leu extends gains on IMF deal
                                
 * Hungary opposition backs PM nominee
                                
 * Czechs agree early elections
                                
 * Risk aversion picks up on U.S. auto news
                                
 
 (Updates throughout)
                                
 By Marius Zaharia and Jason Hovet
                                
 BUCHAREST/PRAGUE, March 30 (Reuters) - Hungary's forint
slipped on Monday despite a deal on a new prime minister who
pledged quick action to pull the country out of crisis, while it
and other currencies suffered from diminished risk appetite.
                                
 Hungary's prime minister designate Gordon Bajnai won backing
from the main political parties on Monday and promised to
restart reforms, but analysts and dealers raised doubts over
what impact he could have and markets gave a cool reception.
                                
 By 1403 GMT, the forint shed 1.5 percent from Friday's close
to 309.6 to the euro and Poland's zloty <EURPLN=> lost 1.7
percent to 4.72 per euro, but traded only slightly down from
opening levels.
                                
 Currencies followed stocks lower as investors also shunned
riskier emerging assets after a U.S. taskforce rejected
turnaround plans for two of the big three carmakers and Spain
bailed out its first bank. [ID:nLU377246]
                                
 The choice of Bajnai, Hungary's economy minister, to replace
outgoing Prime Minister Ferenc Gyurcsany ended a week-long
search for a successor, but left doubts. [ID:nLU377246]
                                
 "His economic programme should be enough to halt the run up
of the budget deficit. Nevertheless, political uncertainty still
lingers on," Budapest-based Raiffeisen analyst Zoltan Torok said
in a note.
                                
 "We do not suggest taking positions on Hungarian bonds or on
the forint market. We forecast EUR/HUF 300 in June," he added.
                                
 
                                
 NO NEWS IS NOT GOOD NEWS
                                
 In the Czech Republic, where the government fall last week
piled pressure on currencies, leaders of the biggest political
parties agreed over the weekend on an early election, although
the timing and what government would lead the country in the
meantime was still uncertain. [ID:LS398425]
                                
 The crown <EURCZK=> lost 0.4 percent to 27.4 per euro,
outperforming peers after sharply falling last week.
                                
 Government bond yields edged higher on Monday, hit by
weakening currencies. In Poland the finance ministry was due to
release its upcoming debt supply late on Monday or on Tuesday.
                                
 "We continue to expect political newsflow to act as a drag
on regional markets in the near term," UniCredit analysts said
in a research note. "From a longer-term perspective we see
growth as being the key market driver, both to the extent that
it impacts macro vulnerabilities and impacts politics."
                                
 Political nerves hung on currencies last week, but markets
found some relief in a global stocks rally and confirmation of
International Monetary Fund aid packages for Serbia and Romania
-- with the latter becoming the third EU member to seek outside
aid after Latvia and Hungary.
                                
 The leu <EURRON=> extended gains from last week's IMF deal
on Monday, rising 0.5 percent to a seven-week high, and dealers
said it was likely due to covert central bank interventions.
[ID:nLU484643] 
                                
 However, Fitch ratings agency said on Monday the IMF deal
wasn't yet enough to boost Romania's rating. [ID:nBUC001322]
                                
 A worsening of economies as demand for central Europe's
exports sink has raised stakes for governments and brought
concern social unrest will force them into lax fiscal policies.
                                
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   27.415   27.298  -0.43%    -2.41%
Polish zloty     <EURPLN=>    4.721    4.643  -1.65%   -12.84%
Hungarian forint <EURHUF=>  309.06   304.35   -1.52%   -14.73%
Croatian kuna    <EURHRK=>    7.478    7.456  -0.29%    -1.51%
Romanian leu     <EURRON=>    4.222    4.243  +0.5%     -4.92%
Serbian dinar    <EURRSD=>   94.578   94.537  -0.04%    -5.39%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -4 basis points to  207bps over bmk*
4-yr T-bond   CZ4YT=RR   +20 basis points to  +225bps over bmk*
8-yr T-bond   CZ8YT=RR   +7 basis points to  +326bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1508 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
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 (Reporting by Reuters bureaus, Writing by Marius Zaharia and
Jason Hovet)