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CEE MARKETS-Currencies firm, better-than-expected GDP data boosts Czech crown

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BUCHAREST, Feb 2 (Reuters) - The Czech crown firmed to a more than 10-1/2 month high on Tuesday after data showed its economy grew on a quarterly basis against expectations, while other central and eastern European currencies also gained. By 1040 GMT, the crown was up 0.1% against the euro at 25.9300. The Czech economy grew on a quarterly basis to end 2020, defying expectations of a fall amid tighter coronavirus lockdown measures, preliminary data showed. Markets have priced in expectations that the Czech central bank (CNB) could start hiking interest rates later in 2021, ahead of others in the region, eyeing inflationary pressures from still-low unemployment and a record income tax cut. "From the CNB's point of view, the better GDP result is an argument in favour of considering raising rates this year, although the stronger crown speaks against hurrying with tighter monetary conditions," said Radomir Jac, chief economist with Generali Investments CEE. Short-end forward rate agreements (FRAs) climbed slightly after the GDP data. "Today's data increases a probability that the CNB will hike in the third quarter if the pandemic fades away after vaccination," Erste Bank said in a note. "Today's figures should support the crown for this reason." Elsewhere in the region, the Hungarian forint extended its gains from the previous session to a seven-week high. At 1040 GMT it was up 0.1% against the euro at 355.5000. "There is no fundamental reason for the firming of the forint; it is a technical move while all emerging currencies are strengthening," said a trader in Budapest. "Based on the technical picture there is room for the forint to strengthen as far as 353 or 352." The Romanian leu also benefitted from the rise in regional currencies, trading 0.1% up versus the euro. The Polish zloty was 0.2% stronger versus the euro at 4.5025, testing the 4.50 level which analysts see as a line the central bank will not allow the currency to drop under. "On the one hand, the direction of a weaker zloty is counteracted by solid economic foundations, and on the other, the narrative of the National Bank of Poland protects against breaking the 4.50 barrier," Bank Millennium said in a note. Stocks markets were mixed across the region, with Prague's bluechip index and Bucharest's up 1.8% and 0.2%, respectively, while Warsaw's fell 0.8%. CEE SNAPSHO AT MARKETS T 1142 CET CURRENC IES Latest Previou Daily Change s bid close change in 2021 Czech <EURCZK= 25.9300 25.9480 +0.07% +1.15% crown > Hungary <EURHUF= 355.500 355.950 +0.13% +2.03% forint > 0 0 Polish <EURPLN= 4.5000 4.5100 +0.22% +1.32% zloty > Romanian <EURRON= 4.8740 4.8765 +0.05% -0.18% leu > Croatian <EURHRK= 7.5825 7.5735 -0.12% -0.46% kuna > Serbian <EURRSD= 117.500 117.600 +0.09% +0.06% dinar > 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2021 Prague 1045.14 1028.07 +1.66% +1.75% 00 Budapest 43670.6 43703.8 -0.08% +3.71% 8 7 Warsaw 1953.09 1967.72 -0.74% -1.56% Buchares 10415.8 10392.0 +0.23% +6.22% t 3 6 Ljubljan <.SBITOP 939.44 939.47 -0.00% +4.28% a > Zagreb 1797.09 1793.10 +0.22% +3.32% Belgrade <.BELEX1 731.67 732.44 -0.11% -2.26% 5> Sofia 498.99 497.38 +0.32% +11.50 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 0.2680 -0.0310 +098bp -3bps R> s 5-year <CZ5YT=R 0.8580 -0.0240 +157bp -4bps R> s <CZ10YT= 1.3370 -0.0110 +183bp -3bps 10-year RR> s Poland 2-year <PL2YT=R 0.0430 0.0050 +076bp +0bps R> s 5-year <PL5YT=R 0.4260 -0.0300 +114bp -5bps R> s <PL10YT= 1.1650 0.0090 +166bp -1bps 10-year RR> s FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.40 0.45 0.59 0.36 Rep <PRIBOR= > Hungary 0.76 0.76 0.81 0.75 Poland 0.18 0.18 0.18 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Reporting by Luiza Ilie in Bucharest, Anita Komuves in Budapest, Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Shailesh Kuber)