CEE MARKETS 3-Zloty hits 2-mth high on EU funds sales plan

                                
 * Poland's plan to swap EU's euros on mkt lifts PLN
                                
 * Forint leads gains, leu unfazed by dropped euro target
                                
 * Czech crown steady before govt no-confidence vote
                                
 
                                
 Jason Hovet and Marcin Goettig
                                
 WARSAW/PRAGUE, April 26 (Reuters) - The Polish zloty hit a
two-month high against the euro on Tuesday, lifted by the
finance ministry's plans to sell euros on the market, while the
forint continued to be boosted by Hungary's fiscal reform plans.
                                
 Other currencies in the region were stable as investors
awaited a U.S. Federal Reserve policy meeting, at which
policymakers were expected to discuss when to begin exiting
ultra-easy monetary policy.
                                
 "It seems that we are in for further strengthening of the
zloty ... the news regarding the flow of funds is positive and
nobody wants to go against the tide," a Warsaw-based FX dealer
said. 
                                
 Poland announced last week that it would be regularly
selling some of the funds it receives from the European Union on
the spot market to support monetary policy and keep a lid on
inflation. [ID:nLDE73K12N] 
                                
 A member of Poland's 10-strong Monetary Policy Council told
Reuters on Tuesday that the move should gradually strengthen the
zloty and smooth its fluctuations, which in turn should reduce
inflation and limit the need for rate hikes. [ID:nLDE73P0OU]
                                
 "The rising EUR/USD rate is also supporting the zloty. The
next target is 3.92 and then potentially 3.89-3.90," the dealer
said.
                                
 By 1323 GMT, the zloty <EURPLN=> added 0.3 percent against
the euro, to trade at 3.936.
                                
 The market was unmoved by data showing Poland's general
government deficit reached 7.9 percent of GDP in 2010, which was
in line with expectations. [ID:nLDE73P0KU]
                                
 Market players were awaiting Polish retail sales and
unemployment data due to be published on Wednesday at 0800 GMT.
                                
 
                                
 FORINT GAINS
                                
 The forint, the region's top gainer so far in 2011, was
expected to continue to strengthen barring any sudden increase
in global risk aversion. On Tuesday the forint <EURHUF=> added
0.4 percent to 264 to the euro.
                                
 The currency has rallied as investors favoured it over
regional peers, mainly the zloty, on the back of Budapest's
fiscal reform plans, first unveiled in March. Last week,
parliament approved a constitution with strict new rules to
force the country to cut its debt. [ID:nLDE73H0TT]
                                
 "The forint is still fuelled by the government's reform
plans, which markets have appreciated of late, but it also needs
sustained global risk appetite to remain on a firming track," a
Budapest dealer said.
                                
 Elsewhere, the Czech crown <EURCZK=> was steady ahead of a
no-confidence vote which the centre-right governing coalition
was expected to survive.
                                
 Czech President Vaclav Klaus appointed two new ministers
last week in a cabinet reshuffle following a corruption scandal
that nearly brought down the government. [ID:nLDE73K0FJ]
                                
 The Romanian leu <EURRON=> was little changed, shrugging off
widely expected news that the government had scrapped a target
to adopt the euro in 2015. [ID:nLDE73P0C5]
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2011 
Czech crown      <EURCZK=>   24.093   24.058  -0.15%   +3.76%
Polish zloty     <EURPLN=>   3.936     3.947  +0.28%   +0.56%
Hungarian forint <EURHUF=> 264       265.16   +0.44%   +5.3%
Croatian kuna    <EURHRK=>   7.352     7.356  +0.05%   +0.38%
Romanian leu     <EURRON=>   4.072     4.07   -0.05%   +3.95%
Serbian dinar    <EURRSD=>   100.47  100.62   +0.15%   +5.43%
 
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -11 basis points to  -17bps over bmk*
7-yr T-bond   CZ7YT=RR   +6 basis points to  +51bps over bmk*
10-yr T-bond   CZ9YT=RR    -2 basis points to  +68bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +2 basis points to  +320bps over bmk*
5-yr T-bond   PL5YT=RR    0 basis points to  +310bps over bmk*
10-yr T-bond PL10YT=RR   +2 basis points to  +281bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -1 basis points to  +445bps over bmk*
5-yr T-bond   HU5YT=RR    -2 basis points to  +417bps over bmk*
10-yr T-bond   HU10YT=RR  -1 basis points to  +372bps over bmk*
All data taken from Reuters at 1523 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
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 (Reporting by Reuters bureaus, writing by Jason Hovet and
Marcin Goettig; Editing by Susan Fenton)