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CEE MARKETS-Crown leads firming on rate hike bets, shrugs off elections

* Crown strongest vs euro for years on rate hike bets * Zloty firms, ignores that Poland will quit IMF credit line * Forint underperforms after dovish central banker comments By Sandor Peto and Jason Hovet BUDAPEST, Oct 16 (Reuters) - The Czech crown led a rise of Central European currencies on Monday, firming back to levels seen before the central bank (CNB) launched an intervention regime in 2013 and gaining on chances of more interest rate hikes to come.

The crown traded at 25.788 against the euro at 0843 GMT, firmer by 0.2 percent from Friday.

The economy would benefit from a 50-75 basis point interest rate increase before the end of 2018, CNB board member Vojtech Benda was quoted as saying on Thursday.

The CNB, which has the lowest inflation target in the region at 2 percent, became the first European Union central bank in August to hike rates since 2012.

The currency usually ignores politics. The prospect, that at elections at the end of this week, voters look set to hand leadership to tough-talking populist billionaire Andrej Babis, does not affect it either.

Babis is ready to take on Brussels but without the burden of ideology that has dragged Poland and Hungary into rifts with Brussels.

Warsaw judiciary reform plans, which have triggered worries over the rule of law in Brussels, maintain risks to the zloty which has been helped this month by a dollar selling.

The dollar regained some composure on Monday, but Poland's good economic prospects and stability buoyed the zloty which firmed 0.2 percent to 4.2432 against the euro.

It shrugged off an announcement made by the Finance Ministry on Saturday that Poland would quit a precautionary Flexible Credit Line from the International Monetary Fund.

"The external stability of the economy remains high (low current account deficit, high foreign exchange reserves, low short-term debt)," Bank Millennium economists said in a note.

Polish and Hungarian government bond yields mostly fell by 2-3 basis points.

The forint and the leu underperformed the crown and the zloty.

Hungarian central bank (NBH) Deputy Governor Marton Nagy spurred expectations for further monetary easing in dovish comments on Friday, but failed to talk down the forint.

Trading at 308.10 against the euro on Monday, it stays near four-week highs, and it may head towards 305 if the international sentiment remains positive, one Budapest-based dealer said.

The NBH's weekly fx swap auction later on Monday is unlikely to weaken the forint as it will not tender the most liquid 12-month expiry, traders said.

Elsewhere, Bucharest also plans controversial judiciary reforms, like Warsaw, and that is an issue weighing on Romanian assets.

CEE MARKETS SNAPSH AT 1043 CET OT CURRENCIES Latest Previo Daily Change us bid close change in 2017 Czech crown 25.788 25.838 +0.20 4.73% 0 5 % Hungary 308.10 308.41 +0.10 0.23% forint 00 50 % Polish zloty 4.2432 4.2525 +0.22 3.79% % Romanian leu 4.5845 4.5877 +0.07 -1.08% % Croatian 7.5060 7.5095 +0.05 0.65% kuna % Serbian 119.16 119.35 +0.16 3.52% dinar 00 00 % Note: daily calculated previo close 1800 change from us at CET STOCKS Latest Previo Daily Change us close change in 2017 Prague 1052.2 1053.0 -0.08% +14.1 9 8 8% Budapest 38986. 38894. +0.24 +21.8 63 88 % 2% Warsaw 2536.3 2528.1 +0.32 +30.2 0 6 % 1% Bucharest 8031.4 8034.9 -0.04% +13.3 7 6 6% Ljubljana 812.98 816.75 -0.46% +13.2 9% Zagreb 1847.8 1862.4 -0.79% -7.37% 3 8 Belgrade 728.75 727.24 +0.21 +1.59 % % Sofia 669.47 669.17 +0.04 +14.1 % 6% BONDS Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republic 2-year 0.086 0.149 +081b +15bp ps s 5-year 0.504 0.012 +082b +2bps ps 10-year 1.364 -0.002 +096b +0bps ps Poland 2-year 1.694 -0.004 +241b -1bps ps 5-year 2.648 -0.017 +297b -1bps ps 10-year 3.288 -0.02 +288b -2bps ps FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M interb ank Czech Rep Hungary Poland Note: FRA are for ask quotes prices ********************************************************* ***** (Reporting by Sandor Peto Additional reporting by Agnieszka Barteczko in Warsaw Editing by Jeremy Gaunt)