CEE MARKETS 2-Zloty, crown dip; focus on inflation

                                
 * Investors pause, leaving FX, stocks mixed
                                
 * CPI data keeps rate cuts in view
                                
 * Hungary bonds stronger on short end
                                
 
  (Adds details, bonds)
                                
 By Jason Hovet
                                
 PRAGUE, Aug 11 (Reuters) - The Polish zloty and Czech crown
dipped against the euro on Tuesday but central European
currencies were mostly steady as risk sentiment waned and 
investors paused to take in the region's inflation data.
                                
 Inflation in Romania slowed more than expected in July, 
while Hungarian inflation surged due to tax changes but by less
than forecast by analysts, who said the lower interest rate
outlook was unchanged. [ID:nLB394727] [ID:nLB353159]
                                
 The Hungarian forint <EURHUF=> was steady at 269.85 to the
euro, and the Romania leu <EURRON=> was off 0.1 percent.
                                
 The zloty <EURPLN=> fell 0.2 percent to 4.13 to the euro by
0752 GMT, and the crown bid down 0.1 percent from Monday's
domestic close at 25.674.
                                
 "The general picture that we are seeing is a tendency for
CPI to decelerate ... and that leaves room open for further rate
cuts in the region," said Lars Christensen, emerging markets
economist at Danske Bank.
                                
 "So in general the trend is for softer currencies but at the
moment global risk sentiment is overshadowing that."
                                
 The zloty, crown and forint are 3-8 percent stronger since
June while stock exchanges in Budapest and Prague have added
more than 20 percent in that time.
                                
 But summer holidays dulled trade on Tuesday and central
European stocks were mixed with small gains in Prague and
Budapest equities and a 1 percent rise in Poland.
                                
 
                                
 RATE DEBATE
                                
 The region's CPI figures followed a sharp deceleration in
Czech inflation, revealed by data on Monday. Poland's data are
due on Wednesday and analysts see the figure above the central
bank's target, which could put a pause on policy easing.
                                
 Bonds in the Czech Republic and Hungary were stronger on the
short end, with investors in the latter pricing in a roughly 50
basis point cut for August's rate meeting, dealers said.
                                
 Hungary's interest rates are among the highest in Europe
even after the central bank cut to 8.5 percent two weeks ago,
its first move since January that analysts said was designed to
catch up with the rest of the region.
"It's hard to allocate money when clients get double digit
interest rates at commercial bank deposits," Budapest fixed
income dealer said.
                                
 "Funds or insurers might buy the long end, but they don't
seem to have too much cash right now."
                                
 Rate setters across the region have mostly suggested they
are near the end of easing cycles.
                                
 But some analysts say that while there are early signs of
the region's economy finding a floor, rapidly decelerating
inflation due to continued economic weakness may force
policymakers to embark on further rate cuts.
                                
 
--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   25.696   25.675  -0.08%    +4.11%
Polish zloty     <EURPLN=>    4.129    4.123  -0.15%    -0.34%
Hungarian forint <EURHUF=>  269.85   269.87   +0.01%    -2.33%
Croatian kuna    <EURHRK=>    7.322    7.332  +0.14%    +0.59%
Romanian leu     <EURRON=>    4.21     4.207  -0.07%    -4.65%
Serbian dinar    <EURRSD=>   93.37    93.3    -0.07%    -4.17%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -10 basis points to  83bps over bmk*
4-yr T-bond   CZ4YT=RR   +14 basis points to  +142bps over bmk*
8-yr T-bond   CZ8YT=RR   +9 basis points to  +242bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    0 basis points to  +666bps over bmk*
5-yr T-bond   HU5YT=RR    -4 basis points to  +596bps over bmk*
10-yr T-bond   HU10YT=RR  -4 basis points to  +514bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1109 CET.
Currency percent change calculated from the daily domestic 
close at 1500 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news [EMRG]
Spot FX rates
Eastern Europe spot FX <EEFX=>    Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=>       Latin America spot FX <LATAMFX=>
Other news and reports  
World central bank news [CEN]  Economic Data Guide <ECONGUIDE> 
Official rates [GLOBAL/INT]  Emerging Diary [EMRG/DIARY] 
Top events [M/DIARY]  Diaries [DIARY] Diaries Index [IND/DIARY] 
 (Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Ruth Pitchford)