CEE MARKETS 2-Political deal aids Czech crown, region up

                                
 * FX, stocks rise on risk appetite
                                
 * IMF talk on euroisation in CEE helps FX
                                
 * Czech leaders seal new govt deal
                                
 
  (Adds details, fixed income)
                                
 By Jason Hovet
                                
 PRAGUE, April 6 (Reuters) - The Czech crown gained on Monday
after a late weekend deal to put a new government in place,
while rising risk appetite lifted emerging Europe's currencies,
sending Hungary's forint to a two-month high.
 Dealers said a news report that an International Monetary
Fund document recommended struggling EU members in the region
should switch to the euro -- even without full euro zone
membership -- added to overall better sentiment. [ID:nL5363985]
                                
 Czech political leaders moved closer to replacing outgoing
Prime Minister Mirek Topolanek's cabinet after agreeing on
Sunday to form an interim cabinet led by statistical office
chief Jan Fischer to run the country until an early election,
probably in October. [ID:nL5286693]
                                
 Central European stocks gained 1-3 percent, helped by a rise
in appetite for risk that benefitted global equities and
emerging markets.
                                
 The crown <EURCZK=> rose 0.9 percent over Friday's domestic
close to 26.4 to the euro by 0919 GMT, hitting a three-week
high. Hungary's forint <EURHUF=> rose 1.6 percent to 292.13 per
euro and the Polish zloty <EURPLN=> jumped 1.9 percent to 4.4.
                                
 "We are still gaining support from the overall risk rally
and a positive tone in the region," Komercni Banka dealer
Miroslav Tutter said.
                                
 
                                
 EUROISATION
                                
 The IMF paper said euroisation offered the largest benefits
in resolving foreign currency debt overhang, along with removing
uncertainty and boosting confidence.
                                
 Analysts said the IMF paper, cited in the Financial Times,
was probably part of an internal debate in the Fund and not an
official position. 
                                
 They also said the recommendation may have been overtaken by
the G20's move to bolster IMF funds to quash any concerns over
emerging market economies' access to funding.
                                
 On Monday, the Romanian leu <EURRON=> added 0.3 percent,
piling on to 3.5 percent gains since the country secured a 20
billion euro IMF-led aid package last month.
                                
 Romania's central bank chief said over the weekend the bank
was reassured by the firming leu but still reserves the right to
intervene. [ID:nL4590379]
                                
 The region's currencies have dropped sharply since hitting
summer highs as worries over growth, financing and banks in
emerging Europe mount, with the zloty losing a quarter of its
value against the euro zone's currency since September. 
                                
 In Hungary, after Prime Minister Ferenc Gyurscany pledged to
step aside last month, Gordon Bajnai cleared two important
hurdles on Sunday to becoming the next leader. [ID:nL5242336]
                                
 "The news-flow in the past few days was positive, from the
G20 summit to the domestic political scene," a Budapest dealer
said. "And confidence in emerging markets has also been slowly
returning which is supportive so I think we'll eventually take a
look at (the forint hitting) 292."
                                
 
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>   26.4     26.63   +0.87%    +1.34%
Polish zloty     <EURPLN=>    4.403    4.486  +1.89%    -6.54%
Hungarian forint <EURHUF=>  292.13   296.7    +1.56%    -9.78%
Croatian kuna    <EURHRK=>    7.437    7.421  -0.22%    -0.97%
Romanian leu     <EURRON=>    4.152    4.165  +0.31%    -3.31%
Serbian dinar    <EURRSD=>   93.58    93.829  +0.27%    -4.38%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -1 basis points to  182bps over bmk*
4-yr T-bond   CZ4YT=RR    -1 basis points to  +231bps over bmk*
8-yr T-bond   CZ8YT=RR    -1 basis points to  +304bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR    -14 basis points to  +955bps over bmk*
5-yr T-bond   HU5YT=RR    -10 basis points to  +909bps over bmk*
10-yr T-bond   HU10YT=RR  -11 basis points to  +775bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1121 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
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 (Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Patrick Graham)