CEE MARKETS-Crown bucks FX weakening, forint down before central bank meets

PRAGUE, Jan 26 (Reuters) - The crown rebounded towards a five-month high on Tuesday after the Czech central bank kept open the chances of rate hikes this year, while other central European currencies weakened on concerns over roadblocks to a $1.9 trillion U.S. stimulus plan. In Hungary, the forint was down 0.2% at 358.40 to the euro by 1003 GMT before a central bank meeting where analysts expect rates to stay on hold after a recent warning from a deputy governor that cautious policy was still justified amid the pandemic. "In recent months, Hungary suffered re-acceleration in core inflation indicators," Commerzbank wrote in a note. "Temporary or not, this could easily spook the FX market and put pressure on the forint exchange rate because Hungary now has the track record of failing to curb inflation for over two years." "Overall, the inflation outlook remains troubled enough so that significant monetary easing from here would be expected only under special circumstances, for example a dire crisis in the real economy, which is not the case right now." Elsewhere, the crown recovered 0.2% to 26.104 per euro, not far from the five-month peak at 26.055 the Czech currency hit on Monday. Central bank Governor Jiri Rusnok was quoted as saying in an interview with Bloomberg news agency that Czech policymakers may raise interest rates up to twice this year. The Czech central bank was in the middle of rate tightening before the pandemic struck, which forced it to cut its main rate by 200 basis points, to 0.25%. It is still the most hawkish central bank in the region. Romania's central bank unexpectedly cut its benchmark rate by a quarter-point to 1.25% on Jan. 15, adding to a fast fall in bond yields since elections late last year. That vote delivered a centre-right government and has cut some of the risks around the country's large fiscal deficits. Romanian 10-year bond yields have dropped to 2.85% from 3.37% seen in mid-December. At the same time, Hungarian yields have risen amid higher issuance and an increase in U.S. yields, cutting the spread between Hungarian and Romanian paper to around 50 basis points from around 120 bps. Hungarian yields though have started moving lower. "At the beginning of the year there was some hesitancy, but the direction is clear now, foreign investors have returned," a Budapest trader said. CEE SNAPSHO AT MARKETS T 1103 CET CURRENC IES Latest Previou Daily Change s bid close change in 2021 EURCZK Czech <EURCZK 26.1040 26.1460 +0.16% +0.48% = crown => EURHUF Hungary <EURHUF 358.400 357.570 -0.23% +1.21% = forint => 0 0 EURPLN Polish <EURPLN 4.5500 4.5432 -0.15% +0.20% = zloty => EURRON Romanian <EURRON 4.8750 4.8741 -0.02% -0.21% = leu => EURHRK Croatian <EURHRK 7.5620 7.5640 +0.03% -0.19% = kuna => EURRSD Serbian <EURRSD 117.500 117.600 +0.09% +0.06% = dinar => 0 0 Note: calcula 1800 daily ted CET change from STOCKS Latest Previou Daily Change s close change in 2021 .PX Prague 1060.15 1061.07 -0.09% +3.21% 00 .BUX Budapest 43555.6 43188.9 +0.85% +3.44% 8 4 .WIG20 Warsaw <.WIG20 1941.94 1945.78 -0.20% -2.12% > .BETI Buchares 10285.1 10321.3 -0.35% +4.89% t 5 8 .SBITO Ljubljan <.SBITO 938.17 936.87 +0.14% +4.14% P a P> .CRBEX Zagreb <.CRBEX 1786.53 1779.19 +0.41% +2.72% > .BELEX Belgrade <.BELEX 733.01 732.32 +0.09% -2.08% 15 15> .SOFIX Sofia <.SOFIX 504.13 503.37 +0.15% +12.65 > % BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year <CZ2YT= 0.2350 -0.0130 +096bp -2bps RR RR> s CZ5YT= 5-year <CZ5YT= 0.7470 -0.0450 +149bp -5bps RR RR> s CZ10YT <CZ10YT 1.2630 -0.0120 +180bp -2bps =RR 10-year =RR> s Poland PL2YT= 2-year <PL2YT= 0.0230 -0.0300 +075bp -4bps RR RR> s PL5YT= 5-year <PL5YT= 0.3810 -0.0130 +112bp -2bps RR RR> s PL10YT <PL10YT 1.1830 -0.0010 +172bp -1bps =RR 10-year =RR> s FRA 3x6 6x9 9x12 3M interba nk Czech <CZKFRA 0.38 0.43 0.61 0.36 Rep ><PRIBO R=> Hungary <HUFFRA 0.76 0.78 0.80 0.75 ><BUBOR => Poland <PLNFRA 0.17 0.18 0.19 0.21 ><WIBOR => Note: FRA quotes are for ask prices *********************************** *************************** (Reporting by Jason Hovet in Prague, Anita Komuves in Budapest, and Luiza Ilie in Bucharest; Editing by Jan Harvey)