CEE MARKETS 3-FX lower, worries over Greece weigh on region

                                
 * Currencies, stocks down slightly amid worse sentiment
                                
 * Hungarian bonds oversubscribed, yields up after tender
                                
 
                                
 (Updates throughout)
                                
 By Sandor Peto and Dagmara Leszkowicz
                                
 BUDAPEST/WARSAW, Feb 25 (Reuters) - Central Europe's
currencies slipped on Thursday as warnings from Standard &
Poor's that it could cut Greece's rating [ID:nLDE61N2KL] caused
some jitters.
                                
 However, dealers and analysts said market reaction to Greek
developments was limited as budgets in the region were in a
better shape than in countries in the euro zone's periphery.
                                
 "The market is slightly weaker after the global sentiment
worsened on worries over Greece," said Przemyslaw Winiarczyk,
dealer at Millennium bank. "The euro is also near 9-month lows
against the dollar, but despite these facts the region is
relatively strong."
                                
 "I still think the zloty will strengthen further but not as
fast as previously as there are already lots of positions in
long zloty," he added.
                                
 By 1515 GMT the zloty <EURPLN=> was 0.6 percent weaker at
4.0 to the euro, while the Czech crown <ERUCZK=> and Hungary's
forint <EURHUF=> were 0.5 percent and 0.7 percent down against
the common currency respectively.
                                
 The leu <EURRON=> was only 0.1 percent lower to the euro as
dealers said the currency is less volatile than its peers due to
an IMF-led aid package to Romania.
                                
 The region's stocks were also in the red, trimming previous
slight gains.
                                
 
                                
 BONDS MIXED
                                
 Hungary sold 50 billion forints ($253.6 million) worth of
bonds at auction <HUISSUE>, with three-year bonds sold at 6.69
percent, the lowest average auction yield since July 2007.
                                
 Yields of the country's paper rose some 6-9 basis points
after the tender.
                                
 "The yields rose as everybody is full of bonds after the
auctions," one Budapest-based trader said. "A technical squeeze
may have been behind the recent yield falls. I'm not optimistic
over the next weeks, there are signs that the rally may have
blown out."
                                
 Traders said interest in medium-term and long-term Hungarian
bonds increased as the central bank signalled early this week
that the end of its interest rate cuts may be approaching.
                                
 Rate cuts, totalling 375 basis points since July 2009 to a
record low of 5.75 percent, have pushed down short-term yields,
and investors who believe the yield curve has become too steep
are buying longer-dated bonds now, traders said.
                                
 Polish bonds were stable and dealers said hints from the
central bank's newly appointed Monetary Policy Council members
on possible tightening of monetary policy later in the year may
flatten the bonds curve further.
                                
 The country's 10-strong body left interest rates unchanged
on Wednesday at an all-time low of 3.5 percent. [nLDE61N1AE]
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  25.943  25.819   -0.48%   +1.45%
Polish zloty     <EURPLN=>   4.002   3.977   -0.62%   +2.55%
Hungarian forint <EURHUF=> 271.27  269.48    -0.66%   -0.34%
Croatian kuna    <EURHRK=>   7.269   7.269    0%      +0.55%
Romanian leu     <EURRON=>   4.12    4.117   -0.07%   +2.85%
Serbian dinar    <EURRSD=>  99.528  99.44    -0.09%   -3.67%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR   +7 basis points to    97bps over bmk*
7-yr T-bond   CZ7YT=RR   +2 basis points to  +131bps over bmk*
10-yr T-bond  CZ10YT=RR  +2 basis points to  +110bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +3 basis points to  +402bps over bmk*
5-yr T-bond   PL5YT=RR   +2 basis points to  +332bps over bmk*
10-yr T-bond  PL10YT=RR  +2 basis points to  +289bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +3 basis points to  +642bps over bmk*
5-yr T-bond   HU5YT=RR   +2 basis points to  +493bps over bmk*
10-yr T-bond  HU10YT=RR  +2 basis points to  +443bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1515 CET.
Currency percent change calculated from the daily domestic 
close at 1700 GMT.
 For related news and prices, click on the codes in brackets:
All emerging market news [EMRG]
Spot FX rates
Eastern Europe spot FX <EEFX=>    Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=>       Latin America spot FX <LATAMFX=>
Other news and reports  
World central bank news [CEN]  Economic Data Guide <ECONGUIDE> 
Official rates [GLOBAL/INT]  Emerging Diary [EMRG/DIARY] 
Top events [M/DIARY]  Diaries [DIARY] Diaries Index [IND/DIARY] 
                                
(Reporting by Reuters bureaus, writing by Sandor Peto and
Dagmara Leszkowicz; Editing by Robin Pomeroy)