CEE MARKETS-Currencies firm ahead of Polish economic data

    * Strong Polish economic data expected
    * Currencies hover at peaks
    * Moody's may improve Hungary's rating this week-trader
    * Politics, budget fears keep lid on Romanian assets

    By Sandor Peto and Bartosz Chmielewski
    BUDAPEST, Oct 18 (Reuters) - Central European currencies
extended their gains ahead of a batch of Polish economic figures
due later on Wednesday and which are expected to show continued
robust economic growth in the region.
    The crown, which firmed 0.2 percent to 25.741 by
0828 GMT, is getting additional help from expectations that the
Czech central bank will increase its interest rates further.  
    Polish and Czech current account data released this week and
recent government budget figures have confirmed that most of the
region's main economies remain well-balanced, analysts said.
    The Polish figures due at 1200 GMT are expected to show 5.2
percent annual growth in industrial output in September, and
retail sales growth is seen accelerating to 7.85 pct from 7.6
pct, according to a Reuters poll of analysts.
    "Today we expect the zloty to gain slightly vs the euro
which could be triggered by Polish industrial output and retail
sales data," BZ WBK analysts said in a note.
    The zloty firmed 0.2 percent to 4.2285 against the
euro, though it was slightly off Tuesday's three-month highs.
    Polish government bonds eased a little, reflecting losses in
euro zone markets, as investors awaited the afternoon figures
which, if strong, could add fuel to expectations for Polish
central bank policy tightening next year.
    "The long end might be particularly sensitive to these
releases and the short end will stay strong amid high demand for
short-term bonds," the BZ WBK note said.
    Central bank policies have been diverging in the region in
the past months.
    Czechs, with the lowest inflation target, started to lift
interest rates in August, while the Hungarian bank has eased
policies further.
    The forint has still reached 5-week highs versus the euro
this week, trading on the firm side of the key psychological
line of 310.
    "Moody's could lift the outlook of Hungary's debt rating (in
its review) to positive on Friday, and based on Hungarian
economic indicators, an upgrade cannot be ruled out either," one
Budapest-based fixed income trader said.
    Regional central bankers also watch the hands of European
Central Bank rate setters and hawkish guidance from the ECB's
Oct 26 meeting could reduce appreciation pressure on regional
    A mixture of political and economic risks have been weighing
on Romanian assets, including corruption scandals, a controversy
about judicial reforms plans and fears of a jump in the budget
and current account deficits and inflation.
    Low liquidity in leu markets have been keeping the
currency in balance, though. It was steady at 4.584 against the
euro on Wednesday.
               CEE MARKETS  SNAPSH   AT  1028 CET         
                            Latest  Previo  Daily   Change
                            bid     close   change  in
 Czech crown                25.741  25.784   +0.17   4.92%
                                 0       5       %  
 Hungary                    308.25  308.23  -0.01%   0.18%
 forint                         00      00          
 Polish zloty               4.2285  4.2358   +0.17   4.15%
 Romanian leu               4.5840  4.5840   +0.00  -1.07%
 Croatian                   7.5060  7.5075   +0.02   0.65%
 kuna                                            %  
 Serbian                    119.00  119.14   +0.12   3.66%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            Latest  Previo  Daily   Change
                                    close   change  in
 Prague                     1057.3  1055.9   +0.12   +14.7
                                 0       9       %      2%
 Budapest                   38957.  38909.   +0.12   +21.7
                                19      78       %      3%
 Warsaw                     2519.4  2514.3   +0.20   +29.3
                                 9       6       %      4%
 Bucharest                  8068.0  8063.8   +0.05   +13.8
                                 0       0       %      7%
 Ljubljana                  805.72  811.10  -0.66%   +12.2
 Zagreb                     1843.3  1847.0  -0.20%  -7.59%
                                 4       8          
 Belgrade                   727.18  730.39  -0.44%   +1.37
 Sofia                      669.43  671.11  -0.25%   +14.1
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
   2-year                    0.219  -0.011   +094b   -2bps
   5-year                    0.555   0.018   +088b   +1bps
   10-year                   1.416   0.007   +105b   +0bps
   2-year                    1.704   0.012   +242b   +0bps
   5-year                    2.661    0.01   +299b   +0bps
   10-year                   3.295   0.008   +293b   +0bps
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
 Czech Rep             <PR     0.8    0.97     1.1       0
 Hungary               <BU    0.07     0.1    0.15    0.03
 Poland                <WI    1.77   1.807    1.87    1.73
 Note: FRA     are for ask                                
 quotes        prices                               
 (Reporting by Sandor Peto; Editing by Raissa Kasolowsky)