CEE MARKETS 2-Leu bounces after court backs reform, forint dips

                                
 * Forint trims gains, sticks to key support level
                                
 * Romania court backs vital reform bill
                                
 * Zloty up, lifted by euro, stocks, Bogdanka
                                
 
 (Updates throughout)
                                
 By Dagmara Leszkowicz
                                
 WARSAW, Oct 6 (Reuters) - The leu rose on Wednesday after
Romania's top court backed a reform bill that is vital to
keeping a IMF aid deal on track, while Hungary's forint fell to
the weak side of the key 270 to the euro level.
                                
 The two currencies have been the worst-performing central
European currencies this year and investors are still uncertain
about how the Romanian and Hungarian governments will fare in
meeting budget commitments.
                                
 Markets had mostly priced in a rejection from the Romanian
Constitutional Court for government-backed pension reforms as
the court had already thrown out some savings measures this
year. The approval pushed the leu up 0.3 percent.
                                
 But dealers said the approval [ID:nLDE6950VK] did not clear
the way yet for the government, which holds a thin parliamentary
majority and has struggled to sell local debt to investors and
banks.
                                
 The opposition is also set to file a no-confidence vote
against the government ahead of an IMF mission review of the 20
billion euro aid package at the end of October.
                                
 "The leu will stay in the 4.26-4.27 range because there is
still political tension around," a Bucharest dealer said.
                                
 By 0911 GMT Romania's leu <EURRON=> was bid at 4.267 to the
euro. The forint <EURHUF=> was some 0.3 percent weaker at
270.25.
                                
 
                                
 CZECH BONDS FIRM
                                
 The forint has gained more than 5 percent since the start of
September after the centre-right ruling Fidesz party pledged to
cut the 2011 budget deficit below 3 percent of gross domestic
product, but markets are waiting for details to be released this
month.
                                
 Many analysts remain sceptical that Fidesz can make enough
cuts while keeping a fragile economic recovery going.
                                
 "This is overdone, I don't think that the forint would close
firmer than 270. This has been a big run, there is good chance
for a slight correction (weakening) now," one Budapest-based
dealer said.
                                
 Dealers have said a strong break below the 270 level could
open the way to highs around 261 per euro last seen after the
ruling party Fidesz swept to power in April.
                                
 The Polish zloty <EURPLN=> rose 0.2 percent, catching up
with recent gains by other regional peers. The Czech crown
<ERUCZK=> eased less than 0.1 percent.
                                
 Some dealers also attributed the zloty gains to news that
Czech miner NWR <NWRSsp.PR> had launched an all-cash bid worth
3.43 billion zlotys ($1.21 billion) for Polish rival Bodganka.
[ID:nLDE6941Q5]
                                
 On the bond market, Czech papers held gains after a
five-year bond auction. [ID: nWSF009549]
                                
 
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2010 
Czech crown      <EURCZK=>   24.502    24.489   -0.05%   +7.41%
Polish zloty     <EURPLN=>   3.94    3.947  +0.18%   +4.16%
Hungarian forint <EURHUF=>   270.25    269.5   -0.28%   +0.04%
Croatian kuna    <EURHRK=>   7.315    7.303   -0.16%    -0.08%
Romanian leu     <EURRON=>   4.267    4.281  +0.33%    -0.69%
Serbian dinar    <EURRSD=>   106.19    105.94   -0.24%    -9.71%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +6 basis points to  93bps over bmk*
7-yr T-bond   CZ7YT=RR   +4 basis points to  +101bps over bmk*
10-yr T-bond   CZ9YT=RR   +2 basis points to  +111bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -2 basis points to  +554bps over bmk*
5-yr T-bond   HU5YT=RR    -5 basis points to  +395bps over bmk*
10-yr T-bond   HU10YT=RR  -5 basis points to  +433bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1217 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
and Jason Hovet; Editing by Tim Pearce and Susan Fenton)