CEE MARKETS 2-Zloty lags FX peers on cross trades

                                
 * Zloty underperforms, hit by regional cross trades
                                
 * Other FX gains thanks to the weaker zloty
                                
 
  (adds details, fixed income, changes prices)
                                
 By Marius Zaharia
                                
 BUCHAREST, April 24 (Reuters) - Concerns over Poland's euro
adoption plans strengthened most emerging European currencies on
Friday at the expense of the Polish zloty.
                                
  On Thursday, a central banker said Poland will fail next
year to meet the inflation requirement for euro entry, while a
top aide to the prime minister said the budget deficit may reach
4.6 percent of GDP in 2009, well above the EU's ceiling.
[ID:nLN232241]
                                
 The zloty has shed 6 percent since hitting a three-month
high last week on the back of an expected IMF flexible credit
line. Investors had bet the unit would outperform its peers in
the short run, building up long zloty positions over other
regional currencies.
                                
 But a reversal of global sentiment and bearish local news,
especially those on euro entry, triggered stop losses on those
positions.
                                
 "There is some massive selling in the euro to Czech crown,
and we saw one offshore bank selling... and we heard it was
related to Polish zloty/crown and forint unwinding," a Prague
dealer said.
                                
 By 0919 GMT, the zloty <EURPLN=> had fallen 0.2 percent
against the euro. The Hungarian forint <EURHUF=> jumped 0.7
percent to 296.1 per euro, the Czech crown <EURCZK=> added 0.8
percent and the Romanian leu <EURRON=> had gained 0.3 percent.
                                
 Sentiment on the region also gained after a key survey of
business confidence in Germany, where most of central Europe's
exports go including almost a third of Czech shipments, gave
evidence of a tentative improvement in the euro zone.
[ID:nLO394813]
                                
 The zloty had plunged around 30 percent up to February from
record highs in last summer, leading losses over that period,
but has led a rebound with a 10 percent rise in the past two
months in volatile trade.
                                
 
                                
 SLIGHT PICK-UP FOR DEBT
                                
 In Hungary, which on Thursday sold almost all bonds offered
in the three auctions [ID:nLN934466], the debt agency said it
expects no big improvement in the bond market this year unless
there is a significant shift in global sentiment.
                                
 But Hungary said it would continue with regular sales after
demand was several times oversubscribed on Thursday, in what
analysts said it was another positive signal following well-bid
auctions in the Czech Republic and Poland this month. 
                                
 Hungarian bonds were flat on Friday in calm trade, and 
traders said the market needs more debt issuance to revive.
Czech bonds were mixed, with yields falling in recent days as
plans for a eurobond issue take pressure off of local paper.
[ID:nLN955518]
                                
 Polish bonds weakened and dealers said the market started to
price in a higher budget deficit.
----------------------MARKET SNAPSHOT-------------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2009 
Czech crown      <EURCZK=>  26.66    26.884   +0.84%   +0.35%
Polish zloty     <EURPLN=>   4.476    4.468   -0.18%   -8.07%
Hungarian forint <EURHUF=> 296.1    298.2     +0.71%  -10.99%
Croatian kuna    <EURHRK=>   7.415    7.376   -0.53%   -0.67%
Romanian leu     <EURRON=>   4.231    4.244   +0.31%   -5.12%
Serbian dinar    <EURRSD=>  94.376   94.22    -0.17%   -5.19%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR    -3 basis points to  175bps over bmk*
4-yr T-bond   CZ4YT=RR    -8 basis points to  +181bps over bmk*
8-yr T-bond   CZ8YT=RR   +6 basis points to  +293bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +3 basis points to  +410bps over bmk*
5-yr T-bond   PL5YT=RR   +2 basis points to  +345bps over bmk*
10-yr T-bond PL10YT=RR   +3 basis points to  +297bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond   HU3YT=RR   +3 basis points to  +895bps over bmk*
5-yr T-bond   HU5YT=RR   +3 basis points to  +833bps over bmk*
10-yr T-bond   HU10YT=RR +2 basis points to  +739bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1219 CET.
Currency percent change calculated from the daily domestic 
close at 1600 GMT.
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 (Reporting by Reuters bureaus, Writing by Marius Zaharia;
Editing by Ruth Pitchford)