CEE MARKETS-Forint gains, bond yields edge higher after rate hike in Hungary

(Updates with Hungary cenbank decision, market reaction) WARSAW/BUDAPEST, Aug 24 (Reuters) - The Hungarian forint firmed and government bond yields ticked higher after the central bank raised its key interest rates and said it is starting a gradual withdrawal of its quantitative easing programme. Hungary's central bank raised its base rate by 30 basis points to 1.5%, and said it would continue its cycle of rate hikes to curb inflation and start gradually withdrawing its government bond purchase programme. The forint firmed after the rate hike and was up 0.52% on the day to trade at 348.35 per euro at 1359 GMT. "What started in June is going to continue, that is, slightly higher rates and a stronger forint," an FX trader in Budapest said. Government bond yields on the long end of the curve ticked 1-3 basis points higher after the central bank's decision and press conference, two fixed-income traders in Budapest said. The yield on the 10-year bond rose 3 basis points to 2.83%. The 15-year government bond yield rose 2 basis points to 3.23%. "Yields could rise a little in the near future as a reaction to this announcement, but I do not expect huge moves from cutting weekly bond purchases," one FI trader said. The National Bank of Hungary (NBH) was the first in the European Union to start raising borrowing costs, and it has pledged "firm steps" to rein in higher-than-expected inflation after hiking rates by 30 basis points in July. The Czech crown was 0.09% firmer at 25.537, while the Polish zloty gained 0.17% to trade at 4.5767. In contrast to the Hungarian and Czech central banks, the National Bank of Poland has so far kept rates unchanged at a record low, and the zloty has underperformed regional peers. "The lack of interest rate increases has been visible in the recent weeks, when CZK and HUF have been slightly stronger," PKO BP said in a note. The Polish 10-year bond yield was little changed at 1.747%, while the Czech 10-year yield fell 2 basis points to 1.821%. "The probable increase of the main (Hungarian) interest rate by 30 basis points up to 1.50% may create short-term pressure on the growth of the yield curves in the CEE-3 region," PKO BP said. CEE SNAPSHOT AT MARKETS 1559 CET CURRENCIE S Latest Previou Daily Change s bid close change in 2021 EURCZK Czech 25.5370 25.5610 +0.09% +2.71% = crown EURHUF Hungary 348.3500 350.150 +0.52% +4.13% = forint 0 EURPLN Polish 4.5767 4.5843 +0.17% -0.38% = zloty EURRON Romania 4.9305 4.9300 -0.01% -1.33% = n leu EURHRK Croatia 7.4900 7.4950 +0.07% +0.77% = n kuna EURRSD Serbian 117.5700 117.580 +0.01% +0.00% = dinar 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2021 .PX Prague 1284.51 1283.10 +0.11% +25.06% 00 .BUX Budapes 51645.68 52023.1 -0.73% +22.65% t 9 .WIG20 Warsaw 2292.61 2287.52 +0.22% +15.56% .BETI Buchare 12214.42 12167.2 +0.39% +24.57% st 2 .SBITO Ljublja 1200.12 1201.67 -0.13% +33.22% P na .CRBEX Zagreb 1961.53 1956.26 +0.27% +12.78% .BELEX Belgrad <.BELEX15 796.46 800.12 -0.46% +6.39% 15 e > .SOFIX Sofia 573.39 565.93 +1.32% +28.12% Yield Yield Spread Daily (bid) change vs change Bund in Czech Republic spread CZ2YT= 2-year s CZ5YT= 5-year s CZ10YT 10-year s Poland PL2YT= 2-year s PL5YT= 5-year s PL10YT 10-year s FORWARD 3x6 6x9 9x12 3M interba nk Czech < 1.64 2.08 2.22 0.97 Rep PRIBOR=> Hungary < 2.18 2.29 2.38 1.44 BUBOR=> Poland < 0.42 0.63 0.85 0.21 WIBOR=> Note: are for ask prices FRA quotes ********************************************** **************** (Reporting by Alan Charlish in Warsaw and Anita Komuves in Budapest; Editing by Tomasz Janowski and Jan Harvey)