CEE MARKETS 2-FX trim losses; stay mixed in choppy trade

                                
 * FX mixed as mkt digests rate comments, decisions
                                
 * More weakening likely, say dealers
                                
 * Czech finmin says crown undervalued
                                
 
 (Adds fixed income, detail)
                                
 By Dagmara Leszkowicz
                                
 WARSAW, Feb 26 (Reuters) - The Polish zloty trimmed early
losses on Thursday and Hungary's forint was slightly up on stock
gains, but dealers said central Europe's hard-hit currencies
will likely weaken more.
                                
 At 0937 GMT the Czech crown <ERUCZK=> fell 0.4 percent to
28.5 versus the euro, while the Polish zloty <EURPLN=> was
roughly unchanged and Hungary's forint <EURHUF=> was up 0.5
percent at 299.6 to the euro. Romania's leu <EURRON=> inched up
0.1 percent.
                                
 Analysts said the currencies were supported by gains on the
European and the region's stocks, signalling some improvement in
risk appetite among global investors, with Budapest BUX <.BUX>
leading among its peers with 0.9 percent rise.
                                
 "The trend (of weakening currencies) hasn't changed really
so the recent strengthening could be a short-term correction,"
said Sylwester Brzeczkowski, dealer at ABN Amro in Warsaw.
"Currencies could also be supported by European stocks."
                                
 The zloty slipped on Wednesday after the Polish central bank
cut interest rates by another 25 basis points, saying a sharp
slowdown in the economy justified the cut in the return
investors get for holding zloty assets.
                                
 "As for the Polish zloty I expect it may weaken to 4.77-4.79
in the coming days as another interest rate cut did not help as
well," he said.
                                
 The bank's Monetary Policy Council (MPC) has lowered
borrowing costs by a total of 200 basis points in the current
easing cycle, bringing the key interest rate to 4.0 percent.
                                
 However Wednesday's cut was not as sharp as the previous
ones, as the council pointed to recent zloty weakening and
concerns over its volatility. [ID:nLP445602]
                                
 Falling interest rates have intensified a deep slide in
emerging European currencies, analysts have said, and many
expect a pause in many of the region's easing cycles to ensure
financial stability.
                                
 Hungary left rates unchanged on Monday, despite central
banker Julia Kiraly saying there were downside risks to its
forecasts for growth, which already predict a recession in 2009
and 2010 [ID:nLP831873].
                                
 The Czech crown swung volatile trade. The country's finance
minister told Reuters in an interview late on Wednesday the
crown's rate was undervalued and the ministry could consider
steps to boost it if it remained too weak. [ID:nLP635129].
                                
 The country's bonds were higher on Thursday, but dealers saw
some weakening coming on supply concerns as the country expects
to meet its financing demands only on the domestic market. 
                                
 In Poland and Hungary bonds were stable.
                                
 
 ----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   28.472   28.37   -0.36%    -6.04%
Polish zloty     <EURPLN=>    4.695    4.692  -0.06%   -12.35%
Hungarian forint <EURHUF=>  299.65   301.12   +0.49%   -12.05%
Croatian kuna    <EURHRK=>    7.4      7.387  -0.18%    -0.47%
Romanian leu     <EURRON=>    4.284    4.289  +0.12%    -6.29%
Serbian dinar    <EURRSD=>   93.579   93.849  +0.29%    -4.38%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -3 basis points to  245bps over bmk*
4-yr T-bond   CZ4YT=RR    -6 basis points to  +241bps over bmk*
8-yr T-bond   CZ8YT=RR    -7 basis points to  +300bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR    -10 basis points to  +432bps over bmk*
5-yr T-bond   PL5YT=RR    -11 basis points to  +362bps over bmk*
10-yr T-bond PL10YT=RR    -10 basis points to  +306bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   -31 basis points to  +1190bps over bmk*
5-yr T-bond   HU5YT=RR   -69 basis points to  +1041bps over bmk*
10-yr T-bond   HU10YT=RR -56 basis points to  +854bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0937 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
                                
 
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 (Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz; editing by Patrick Graham)