CEE MARKETS 3-FX down on Libya worries, zloty hit by rate talk

                                
 * Libya tensions weigh on CEE currencies
                                
 * Polish zloty hit by rate outlook, may fall further on
                                
 
 (Updates throughout)
                                
 By Radu Marinas and Dagmara Leszkowicz
                                
 BUCHAREST/WARSAW, Feb 22 (Reuters) - Emerging Europe's
currencies fell on Tuesday on worries over escalating tensions
in Libya, while the Polish zloty was further hit by dovish
comments from a central banker which cooled rate rise
expectations.
                                
 The euro -- the region's main reference currency -- fell in
an intraday trading as the dollar rallied broadly on reducing
risk appetite but it recouped most of its Tuesday losses, giving
a slight support to the region.#
                                
 The Polish zloty <EURPLN=> lost more than 1 percent of its
value against the euro since last Friday as various
policymakers, led by governor Marek Belka, talked down
expectations of an interest rate increase as soon as March.
                                
 Earlier on Tuesday, Adam Glapinski of the 10-strong Monetary
Policy Council said there were currently no grounds for another
rate rise at the next sitting. [ID:nWSF010016]
                                
 "External factors such as turmoil in Libya, are weighing on
the region, while the domestic front is also not supportive for
the zloty, taking into account the recent comments of various
central bankers," said one Warsaw-based dealer.
                                
 The Polish unit may test its key psychological level of 4.0
to the euro in the coming days, he added.
                                
 The zloty was down 0.5 percent from Monday by 1437 GMT while
the Hungarian forint <EURHUF=> was about 0.4 percent weaker and
the Czech crown <EURCZK=> was flat against the common currency.
                                

                                
 BONDS LITTLE CHANGED
                                
 The Polish bonds strengthened at the short-end of the curve
earlier in the day on dovish comments of a policymaker but
remained stable afterwards. Hungary's papers trimmed some of
their previous losses.
                                
 "The early (price) falls were caused by the Arabian events,
but the move was not powerful," one Budapest-based fixed income
trader said.
                                
 "I expect range-trading to continue. Thursday's bond
auctions <HUISSUE> may breathe life into the market."
                                
 On Thursday Hungary's government will offer bonds worth 45
billion Hungarian forints ($225 million).
                                
 Hungary's central bank kept interest rates unchanged at 6
percent at a meeting on Monday, as expected before four new
members join the Monetary Council and pausing after a string of
three-quarter point rate rises. [ID:nLDE71K1J6]
                                
 In Romania, dealers said the leu <EURRON=> retreated after a
suspected covert intervention by the central bank pushed the
currency to a five-month high on Monday.
                                
 The intervention, which dealers said appeared to have been
the first this year, had briefly helped the leu buck the slide
in emerging European currencies.
                                
 Romania's leu <EURRON=> was each flat against the euro.
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2011 
Czech crown      <EURCZK=>  24.464  24.464       0%   +2.19%
Polish zloty     <EURPLN=>   3.96    3.941   -0.48%   -0.05%
Hungarian forint <EURHUF=> 272.32  271.2     -0.41%   +2.08%
Croatian kuna    <EURHRK=>   7.411   7.385   -0.35%   -0.42%
Romanian leu     <EURRON=>   4.228   4.228       0%   +0.12%
Serbian dinar    <EURRSD=> 102.59  103.01     +0.41%  +3.25%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -7 basis points to  36bps over bmk*
7-yr T-bond   CZ7YT=RR    -1 basis points to  +89bps over bmk*
10-yr T-bond   CZ9YT=RR   +4 basis points to  +93bps over bmk*

Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -7 basis points to  +319bps over bmk*
5-yr T-bond   PL5YT=RR    -8 basis points to  +297bps over bmk*
10-yr T-bond PL10YT=RR    -1 basis points to  +273bps over bmk*

Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    0 basis points to  +521bps over bmk*
5-yr T-bond   HU5YT=RR    0 basis points to  +487bps over bmk*
10-yr T-bond   HU10YT=RR  0 basis points to  +433bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1547 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
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 (Reporting by Reuters bureaus; Writing by Radu Marinas and
Dagmara Leszkowicz; Editing by Toby Chopra)