CEE MARKETS 2-FX hold steady, forint down ahead of rate move

                                
 * Forint touch down ahead of expected 50 bps cut
                                
 * Stocks jump, bond yields a shade lower
                                
 * Poland rate meeting this week, policy seen steady
                                
 
  (Adds fixed income)
                                
 By Dagmara Leszkowicz
                                
 WARSAW, Aug 24 (Reuters) - Emerging European currencies
eased a touch on Monday, with Hungary's forint down before an
expected half percentage point interest rate cut later in the
day.
                                
 Hungary's central bank begins a round of policy meetings for
the region on Monday, with analysts seeing a rate cut to 8.0
percent to aid the rapidly shrinking economy. [ID:nLAG003669]
                                
 At 0857 GMT the forint <EURHUF=> edged 0.1 percent lower
from Friday to bid at 268.5 to the euro before the decision due
at around 1200 GMT. Hungary bond yields fell some 40 basis
points, catching up with a firmer region after local markets
were closed on Thursday and Friday.
                                
 Analysts said a rate cut was unlikely to push the currency
much lower, although a larger than expected reduction such as
the 100 basis points reduction last month was still a
possibility.
                                
 "Today's rate cut is unlikely to lead to a significantly
lower forint," analysts at Commerzbank wrote in a morning note. 
                                
 "It does however demonstrate that the appreciation of the
forint is unlikely to continue, as the central bank is likely to
use any periods of forint strength for further rate cuts."
                                
 The zloty <EURPLN=> was down a touch at 4.114 against the
euro, while the Czech crown <EURCZK=> and Romania's leu
<EURRON=> were steady against the common currency.
                                
 The forint, zloty and crown firmed around 1 percent last
week, with the Czech unit touching its highest this year.
Currency strength has boosted debt markets in the region, with
yields moving lower again on Monday. 
                                
 "Yields are slightly lower, thanks to a strong zloty and
stocks rises," said one Warsaw-base fixed-income dealer. "If the
zloty goes below 4.08 (to the euro), it may impact bonds." 
                                
 Analysts also said investors in Poland are eyeing today's
tender, where the finance ministry is offering 0.8-1.0 billion
zlotys in treasury bills due at 1000 GMT.
                                
 
                                
 OVERWEIGHT
                                
 Central European stocks continued their winning run seen
this summer, adding more than 4 percent in Budapest <.BUX> and 3
percent in Prague <.PX> as more funds shift back to overweight
on the region after lows last year.
                                
 Last week, JP Morgan upgraded Poland, Czech Republic and
Hungary to overweight from underweight due to narrowing credit
spreads and stronger euro zone economic growth that bodes well
for Central Europe's exports. [ID:nWNAB2536]
                                
 While Hungary is expected to continue its easing cycle
further, more analysts say Poland's central bank is at an end
with its one.
                                
 "In Poland, the easing cycle is arguably over, with the
balance of risks likely to be shifting towards tightening from
now on (albeit very gradually)", analysts at Merrill Lynch wrote
in a note on Friday.
                                
 In response to the sharp economic slowdown, Poland's central
bank has cut interest rates by a total of 250 basis points since
November to bring rates to an all-time low of 3.5 percent.
                                
 The Polish central bank's decision on interest rates is due
on Wednesday and the market widely expects the council to leave
borrowing costs unchanged. [ID:nLL463684].
                                
 
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   25.439   25.451   +0.05%   +5.17%
Polish zloty     <EURPLN=>    4.114    4.107   -0.17%   +0.02%
Hungarian forint <EURHUF=>  268.5    268.18    -0.12%   -1.84%
Croatian kuna    <EURHRK=>    7.322    7.305   -0.23%   +0.59%
Romanian leu     <EURRON=>    4.222    4.219   -0.07%   -4.92%
Serbian dinar    <EURRSD=>   92.917   92.902   -0.02%   -3.7%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    0 basis points to  73bps over bmk*
4-yr T-bond   CZ4YT=RR    -16 basis points to  +131bps over bmk*
8-yr T-bond   CZ8YT=RR    -1 basis points to  +250bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -37 basis points to  +632bps over bmk*
5-yr T-bond   HU5YT=RR    -41 basis points to  +562bps over bmk*
10-yr T-bond   HU10YT=RR  -41 basis points to  +477bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1058 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.

                                
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 (Reporting by Reuters bureaus, writing by Dagmara Leszkowicz,
Editing by Stephen Nisbet)