CEE MARKETS 3-Poland election boosts demand for debt

                                
 * Hungary c.bank voted overwhelmingly to hold rates -minutes
                                
 * Currencies erase earlier losses as shares rebound
                                
 * Romanian leu continues rebound after IMF releases funds
                                
 
 (Releads, adds Poland bonds, Hungary cbank, updated currencies)
                                
 By Kuba Jaworowski and Sam Cage
                                
 WARSAW/BUCHAREST, July 7 (Reuters) - Poland's
market-friendly presidential election result boosted demand at a
debt auction on Wednesday and a rebound in equities markets
helped central European currencies to recoup early losses.
                                
 Poland sold a total of 5.96 billion zlotys in 2-year bonds
maturing in 2012 with investor demand double the supply, and the
average yield 7 basis points higher from the previous tender in
early June, the finance ministry said. [ID:LDE6661E8]
                                
 "Yields are slightly higher (at the auction), but looking at
the secondary market, they are improving day by day," said
Adrian Skubij, fixed income dealer at ING bank in Warsaw. "It
looks like foreign investors are coming back to our market."
                                
 Poland was the only European Union member to escape
recession last year and has the strongest economy among central
European peers. Assets have been further boosted by the
weekend's election of pro-business candidate Bronislaw
Komorowski, favoured by markets, as president.
                                
 In Hungary, minutes of the central bank's June meeting
showed it voted overwhelmingly to keep interest rates steady due
to the country's weaker risk assessment, which has also narrowed
the scope for further easing. [ID:nLDE6661FU]
                                
 "They have iced monetary easing," said analyst Gyula Toth at
UniCredit. "We think they will not cut rates at the next
meeting."    
                                
 
                                
 IMF RELIEF
                                
 Most central European currencies fell in early trade as
sentiment towards equities soured, hitting riskier assets, then
rebounded with share markets.
                                
 At 1334 GMT, Poland's zloty <EURPLN=> was up 0.2 percent
against the euro and Hungary's forint <EURHUF=> was 0.3 percent
higher. 
                                
 The Czech crown <EURCZK=> edged up 0.1 percent, as did
Romania's leu <EURRON=>, which extended recent gains after the
International Monetary Fund approved a $1.115 billion
disbursement, reassuring nervous investors in the recession-hit
country.
                                
 The leu has firmed some 4 percent since last week, when it
hit its lowest since the introduction of the euro on worries
about the speed of economic recovery and whether the IMF would
release more funds.
                                
 "The likelihood of deficit overshooting -- on the back of
the deteriorating growth outlook -- and some political risk
might result in a weaker RON this year," said UniCredit's Toth.
                                
 "Consequently we slightly increase our FX forecast to 4.35
RON/EUR for end-2010.
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2010 
Czech crown      <EURCZK=>   25.474   25.502  +0.11%   +3.31%
Polish zloty     <EURPLN=>   4.099    4.105   +0.15%   +0.12%
Hungarian forint <EURHUF=>   283.27   283.97  +0.25%   -4.56%
Croatian kuna    <EURHRK=>   7.187    7.189   +0.03%   +1.7%
Romanian leu     <EURRON=>   4.232    4.235   +0.07%   +0.13%
Serbian dinar    <EURRSD=>   103.79   103.82  +0.03%   -7.62%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +1 basis points to  116bps over bmk*
7-yr T-bond   CZ7YT=RR    -3 basis points to  +137bps over bmk*
10-yr T-bond   CZ9YT=RR    -1 basis points to  +144bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -5 basis points to  +406bps over bmk*
5-yr T-bond   PL5YT=RR    -3 basis points to  +377bps over bmk*
10-yr T-bond PL10YT=RR    -2 basis points to  +322bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -1 basis points to  +606bps over bmk*
5-yr T-bond   HU5YT=RR    -1 basis points to  +576bps over bmk*
10-yr T-bond   HU10YT=RR  0 basis points to  +482bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1534 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
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 (Reporting by Reuters bureaus; Editing by Ron Askew)