CEE MARKETS 2-FX rises; zloty gains further on euro hopes

                                
   (Adds details, fixed income)
                                
 PRAGUE, Sept 12 (Reuters) - The Polish zloty led emerging
European currencies higher against the euro on Friday, helped by
a bit of dollar weakness and extending gains fuelled by Poland's
ambitions to join the euro by 2011.
                                
 The zloty <EURPLN=> rose to 3.358 per euro by 0832 GMT, a
jump of 1.4 percent over Thursday's domestic close, still
boosted by the Polish government's announcement on Wednesday it
aimed to join the euro in 2011, sooner than expected.
                                
 The European Union's executive has welcomed the plan, but
analysts and some EU officials have cast doubt on the timetable,
saying it is too tight given the need to keep the zloty for two
years in the ERM II system, the currency-grid proving ground for
euro aspirants [ID:nLB497344].
                                
 However, Poland is moving ahead with the plans, which have
been cheered by markets and created gains on the long end of the
Polish bond yield curve. 
                                
 "It seems the market has believed the PM's statement (that)
Poland could join the euro zone in 2011," said Marek Kaczor, a
dealer at PKO BP.
                                
 The short end has weakened on the back of expectations for
further interest rate hikes this year to combat inflation that
is nearly twice the central bank's 2.5 percent target.
                                
 Euro zone entry can make a country's existing debt more
attractive to investors because it has usually been issued with
yields much higher than those in the euro zone.
                                
 In other trade, Hungary's forint <EURHUF=> added 0.8 percent
to 238.88 to the euro, while the Czech crown <EURCZK=> gained
0.7 percent to 24.428 per euro after positive current account
data, and also helped by a slightly weaker dollar.
                                
 The euro <EUR=> is the region's main reference, and dealers
often make their trades off euro/dollar moves. The dollar's
recent rally against the euro as growth concerns widen in Europe
has knocked regional currencies back from July records.
                                
 The currency moves have tugged bonds along with it, with
Hungarian yields dropping along with the dollar.
                                
 "Domestic political turmoil and economic fundamentals just
don't matter at all," a Budapest trader said. "We're on a
rollercoaster and after going up and down three times yesterday,
it's just not possible to predict what's ahead."
                                
 In Romania, the leu <EURRON=> nudged up to 0.4 percent,
boosted by comments late on Thursday from central bank Governor
Mugur Isarescu, who said the bank will revise down its 2008
inflation forecast of 6.6 percent, partly due to
lower-than-expected oil prices.
                                
 The Croatian kuna <EURHRK=> was flat at 7.12 per euro and
Serbia's dinar <EURRSD=> inched 0.1 percent higher to 76.45 to
the euro.
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2008 
Czech crown      <EURCZK=>   24.428   24.605  +0.72%   +7.81%
Polish zloty     <EURPLN=>    3.358    3.405  +1.38%   +6.74%
Hungarian forint <EURHUF=>  238.880  240.750  +0.78%   +5.53%
Croatian kuna    <EURHRK=>    7.118    7.118   0%      +2.85%
Romanian leu     <EURRON=>    3.608    3.621  +0.36%   -0.78%
Serbian dinar    <EURRSD=>   76.450   76.500  +0.07%   +2.93%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond   CZ3YT=RR    -3 basis points to   3bps over bmk*
5-yr T-bond   CZ5YT=RR    -4 basis points to  +8bps over bmk*
10-yr T-bond  CZ9YT=RR    -6 basis points to  +26bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -3 basis points to   +244bps over bmk*
5-yr T-bond   PL5YT=RR    -10 basis points to  +203bps over bmk*
10-yr T-bond  PL10YT=RR   -8 basis points to   +164bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -17 basis points to  +485bps over bmk*
5-yr T-bond   HU5YT=RR    -14 basis points to  +456bps over bmk*
10-yr T-bond  HU10YT=RR   -15 basis points to  +367bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1032 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.

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 (Reporting by Reuters bureaux; Writing by Jason Hovet; Editing
by Ruth Pitchford)