* Czech, Hungarian government crisis continues
* Czech cbank expected to hold rates, policy clues sought
* OTP gains on news of 400 billion forint govt loan
(Adds quotes, details, analyst comments)
By Marton Dunai
BUDAPEST, March 26 (Reuters) - Emerging European currencies
eased slightly on Thursday as political uncertainty in Hungary
and the Czech Republic weighed on the region's markets, while
the Czech central bank was expected to keep rates on hold.
Investors are awaiting developments in the Czech Republic
where centre-right Prime Minister Mirek Topolanek lost a vote of
no confidence on Tuesday. His cabinet must resign but will stay
on while politicians debate the next steps.
Hungarian parties agreed to resume talks on a new prime
minister on Thursday or Friday, with banker Gyorgy Suranyi
tipped as a frontrunner. But President Laszlo Solyom urged early
elections to end the political gridlock after a weekend decision
by Prime Minister Ferenc Gyurcsany to step aside.
[].
"We are waiting to see what Suranyi will come out with and
what the political wrangling in the background produces," a
Budapest-based currency dealer said.
The Czech crown <EURCZK=> dropped to a two-week low on
Thursday, hitting 27.54 against the euro, while the forint
traded slightly weaker than the last session at around 301.25.
"We are continuing up (weaker) and Czech politics isn't
helping right now," said a dealer in Prague. "We could see more
pressure on the crown depending on today's central bank
meeting."
The zloty was down 0.37 percent after the central bank cut
interest rates to a historic low on Wednesday. []
Polish central bank rate-setter Andrzej Slawinski said on
Thursday that the economy may have come out of its sharpest
slowdown period, pointing to a survey that showed companies more
confident about orders and growth. []
PRAGUE CBANK MOVES EYED
With Czech rates expected to stay on hold, markets watched
for signals from Thursday's central bank meeting for signals on
upcoming moves. Some analysts believe there is still room for a
smaller cut even though rates are at a historical low.
[]
Average bond spreads tightened recently. Komercni Banka said
in a note, but risks for deterioration remain.
"The CNB (central bank) has noted several times that we
might have already seen a low in official rates and time is
approaching for thinking about first hike as weakening currency
is going to push inflation numbers higher," Komercni dealers
said.
On the Budapest Stock Exchange, OTP <OTPB.BU> shares
surged 5.8 percent after the open on Thursday, partly boosted by
news that the government had agreed to grant OTP bank around 400
billion forints' ($1.80 billion) worth of loans from IMF funds.
At 0930 GMT OTP traded 3.4 percent higher at 2,150 forints
while FHB Bank <FHBK.BU>, the other bank which receives loans
from the government, was up 4.6 percent.
"It (the loans) is definitely good news for OTP. The stock
is rising but it has not had a palpable impact on the forint," a
trader said.
In neighbouring Romania, the IMF asked Western banks on
Wednesday to affirm support for local subsidiaries and back an
IMF-led rescue package by maintaining their exposure.
[]
--------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.485 27.31 -0.64% -2.66%
Polish zloty <EURPLN=> 4.56 4.543 -0.37% -9.76%
Hungarian forint <EURHUF=> 301.65 300 -0.55% -12.63%
Croatian kuna <EURHRK=> 7.46 7.447 -0.17% -1.27%
Romanian leu <EURRON=> 4.272 4.275 +0.07% -6.03%
Serbian dinar <EURRSD=> 94.52 94.81 +0.31% -5.33%
All data taken from Reuters at 1058 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Krisztina Than and Marton Dunai; Editing by Andy
Bruce)
