CEE MARKETS 1-FX up on stocks rally, awaiting rate decisions

                                
 WARSAW, May 7 (Reuters) - Emerging European currencies rose
on Thursday on the back of a rally in stocks, with the Czech
crown gaining sharply after a strong trade surplus posting and
before an expected interest rate cut later in the day.
                                
 Markets were also looking ahead to a European Central Bank
rate decision, while stocks rallied on reassurances over U.S.
banks from Treasury Secretary Timothy Geithner. [ID:nSP453357]
                                
 Stocks were up on hopes of more reasonable results from the
stress tests (on banks)," said a London trader. "So sentiment is
good right now but there is a risk of a correction."
                                
 At 0817 GMT the Czech currency <EURCZK=> was 0.7 percent up
against the euro to bid at 26.58, while Hungary's forint
<EURHUF=> rose 1.1 percent and Romania's leu <EURRON=> gained
0.5 percent to 4.129 per euro.
                                
 The zloty rose 1 percent following late confirmation on
Wednesday that the International Monetary Fund approved a $20.58
billion flexible credit line for Poland, although dealers said
much of the information was already priced in. [ID:nN06334179]
                                
 In the Czech Republic markets had starting pricing in a
quarter percentage point rate cut on Thursday. [ID:nL7943308]
The unit also gained from data showing the March trade balance
posted a record surplus of 23.4 billion crowns. [ID:nL7435981]
                                
 "It is a very positive news for the crown," said Helena
Horska, economist at Raiffeisen bank, adding weak imports and
falling consumption added to the surplus.
                                
 The euro zone's central bank was seen trimming rates to a 
record low of 1.0 percent, but the market will focus now on
whether it will announce any unconventional steps to get the
euro zone economy to a growth path. [ID:nSP453357]
                                
 Analysts said investors in the region would also eye closely
the results of stress tests of 19 leading U.S. banks due later
on Thursday that are expected to show more than half in need of
dozens of billions of dollars in extra capital. [ID:nSP453357]
                                
 "Definitely stress tests in the U.S. together with the ECB
decision are in focus," said one Warsaw-based dealer. 
                                
 "The results (of the stress tests) and its impact on the
global stocks are likely to affect regional currencies, but I
would expect the region to appreciate slightly further as the
sentiment overall is better."
                                
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   26.58    26.755  +0.66%   +0.65%
Polish zloty     <EURPLN=>   4.35    4.394  +1.01%    -5.4%
Hungarian forint <EURHUF=>   280.77    283.86  +1.1%    -6.13%
Croatian kuna    <EURHRK=>   7.354    7.36  +0.08%   +0.15%
Romanian leu     <EURRON=>   4.129    4.15  +0.51%    -2.78%
Serbian dinar    <EURRSD=>   95.049    95.035   -0.01%    -5.86%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -2 basis points to  169bps over bmk*
4-yr T-bond   CZ4YT=RR    -6 basis points to  +209bps over bmk*
8-yr T-bond   CZ8YT=RR   +4 basis points to  +293bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -5 basis points to  +420bps over bmk*
5-yr T-bond   PL5YT=RR    -1 basis points to  +339bps over bmk*
10-yr T-bond PL10YT=RR    -2 basis points to  +292bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +3 basis points to  +867bps over bmk*
5-yr T-bond   HU5YT=RR    -3 basis points to  +790bps over bmk*
10-yr T-bond   HU10YT=RR  -2 basis points to  +685bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1018 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
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 (Reporting by Reuters bureaus, writing by Dagmara Leszkowicz)