CEE MARKETS 2-Zloty, forint give up gains; Polish yields up

                                
 * FX, stocks mostly give up modest gains after China move
                                
 * Focus on debt tenders, Hungary sells bills later
                                
 * Polish bonds fall further on rate hike expectations
                                
 
  (Adds bonds, details, updates prices)
                                
 By Jason Hovet
                                
 PRAGUE, June 22 (Reuters) - Emerging European currencies
slipped on Tuesday, giving up gains from the previous day after
investors booked profits from a risk rally sparked by China
loosening its grip on the yuan.
                                
 China's move touched off optimism a stronger yuan would lift
the global economy through higher demand for goods and
especially commodities, which pushed investors to snap up
central European assets in the renewed risk-buying.
 The zloty <EURPLN=> fell 0.5 percent, after touching a
one-month high on Monday, as investors booked profits. Hungary's
forint <EURHUF=>, which firmed near its 50-day moving average on
Monday before retreating, dipped 0.4 percent by 0900 GMT.
                                
 The Czech crown <EURCZK=> and the Romanian leu <EURRON=> --
the region's steadier currencies -- inched up about 0.2 percent.
                                
 "The leu is firming marginally this morning, but the Chinese
bubble is breaking," said one trader in Bucharest. "Europe has
problems, ratings downgrades for banks and all that, so risk
aversion may return."
                                
 Stocks were mixed on Tuesday, with Prague <.PX> down 0.6
percent and off a one-month high, but Budapest <.BUX> and
Bucharest <.BETI> up a touch. The Thomson Reuters Equity
Emerging Markets Europe Index <.TRXFLDEETU> slipped 0.5 percent.
                                
 Asset values in the region have fluctuated in recent months.
Analysts expected limited lasting impact in central Europe from
the loosening of the yuan, and the region's currencies are much
less dependent on commodity prices than other emerging markets.
                                
 
                                
 DEBT TENDERS STILL TEST
                                
 While lower-indebted central Europe has yet to shake off
fears the euro zone's debt woes may spread to the region,
analysts expect lower volatility to give a boost to currencies,
which are seen gaining this year in the economic recovery.
                                
 Czech dealers said the crown was finding tough resistance at
the 25.800 per euro level and would not likely weaken past that
in coming sessions. It bid at 25.700 on Tuesday.
                                
 But central European governments are battling rising debt
yields and markets are watching a Hungarian tender on Tuesday.
Romania's average yield jumped 56 bps to 6.85 percent on
one-year paper at a Monday auction. It sold less than planned.
                                
 Analysts said the ministry was signalling a strategy of only
accepting yields below 7 percent, which was a risk and might
prove impossible to keep up as Romania's funding needs pile up.
                                
 Polish bond prices fell for a second straight day on the
back of expectations for interest rate hikes later this year.
                                
 "The market is starting to price in first rate hikes," said
Remigiusz Zalewski, dealer at BRE bank in Warsaw. "Bonds may
enter a falling trend in the next weeks or months."
                                
 Hungary's central bank kept rates at an all-time low of 5.25
percent on Monday, and declined to give clues as to its future
rate trajectory but urged tight fiscal policy from the new
government. [ID:nLDE65K0MM]
                                
 
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2010 
Czech crown      <EURCZK=>   25.7     25.765  +0.25%   +2.4%
Polish zloty     <EURPLN=>    4.054    4.039  -0.37%   +1.23%
Hungarian forint <EURHUF=>  279.44   278.06   -0.49%   -3.25%
Croatian kuna    <EURHRK=>    7.197    7.2    +0.04%   +1.56%
Romanian leu     <EURRON=>    4.221    4.23   +0.21%   +0.39%
Serbian dinar    <EURRSD=>  103.66   103.8    +0.14%   -7.51%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -4 basis points to  147bps over bmk*
7-yr T-bond   CZ7YT=RR   +1 basis points to  +160bps over bmk*
10-yr T-bond   CZ9YT=RR   +2 basis points to  +150bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +5 basis points to  +419bps over bmk*
5-yr T-bond   PL5YT=RR   +7 basis points to  +380bps over bmk*
10-yr T-bond PL10YT=RR   +6 basis points to  +317bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1102 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, editing
by Stephen Nisbet)