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CEE MARKETS-Currencies test multi-week highs, stocks track Asian fall

* Currencies reach or test multi-week highs despite stocks fall * Dollar retreat, hawkish Hungarian comments help currencies * Stocks track decline of Asian and Western European peers * Banca Transilvania falls after earnings report By Sandor Peto and Alan Charlish BUDAPEST/WARSAW, Feb 27 (Reuters) - Central European currencies shrugged off a global decline in stock prices on Wednesday, strengthened by a weaker dollar and hawkish central bank comments from Budapest.

The region's main currencies hit or tested multi-week highs.

The zloty and the leu were up 0.2 percent against the euro by 1003 GMT, while the forint and the Czech crown firmed by 0.1 percent.

Hungary's central bank kept interest rates on hold on Tuesday, but its comments underpinned expectations that it could start to tighten policy in March after keeping its base rate at record lows for almost three years.

The comments helped the forint and also supported a rebound in the zloty, Santander bank analysts said in a note.

A retreat in the dollar index provided a favourable international backdrop, while the possibility of a delay in Britain's exit from the European Union also improved sentiment somewhat, market participants said.

The zloty rose to its strongest level since Feb. 11, at 4.3156 to the euro.

"It's a natural reaction to other emerging market currencies strengthening," one Warsaw dealer said.

Investors watched an escalation of border tensions between India and Pakistan, but the negative impact was limited to stocks.

The leu approached this month's strongest level against the euro, while Bucharest led a decline in equities in the region, with its bluechip index shedding 0.9 percent.

Banca Transilvania led the weakening of Romanian shares, shedding 3.2 percent after reporting a modest rise in 2018 profits.

Romanian stocks have suffered since the government announced new taxes on banks and energy companies in December.

A decree on how Romania's new taxes will be applied is in parliament and will undergo changes, but there is uncertainty over the details.

Finance Minister Eugen Teodorovici said on Wednesday that he hoped to find a solution on the bank tax soon to dispel fears, and unveil a set of investment-friendly measures next month.

Elsewhere in the region, Budapest stocks shed more than Czech and Polish peers, down half a percent.

OTP Bank was the main driver, easing 0.5 percent after failing to break through a technical resistance level at 11,850 forints ($42.68) in recent days.

CEE SNAPSHOT AT MARKETS 1103 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech Hungary Polish Romanian Croatian Serbian Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1062.65 1065.390 -0.26% +7.71% 0 Budapest 40611.90 40819.08 -0.51% +3.76% Warsaw 2357.23 2365.93 -0.37% +3.54% Bucharest 7707.92 7775.17 -0.86% +4.39% Ljubljana <.SBITOP 843.12 844.39 -0.15% +4.83% > Zagreb 1784.35 1782.77 +0.09% +2.03% Belgrade <.BELEX1 680.03 680.12 -0.01% -10.72% 5> Sofia 590.29 591.07 -0.13% -0.70% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year 5-year 10-year Poland 2-year 5-year 10-year FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.26 2.32 2.35 2.02 (PRIBOR= ) Hungary 0.38 0.62 0.84 0.15 Poland 1.74 1.74 1.74 1.72 Note: FRA are for ask prices quotes ************************************************* ************* ($1 = 277.6500 forints) (Additional reporting by Luiza Ilie in Bucharest; Editing by Kevin Liffey)