CEE MARKETS-Forint, zloty cap weekly gains, Prague stocks outperform as CEZ shares soar

By Anita Komuves BUDAPEST, May 21 (Reuters) - Central European currencies were muted on Friday, with the Hungarian forint and the Polish zloty taking a break after sharp gains fuelled by rate hike expectations earlier this week. Stocks in Prague outperformed the region, led by utility company CEZ. The zloty and the forint strengthened past psychologically important levels versus the euro this week on expectations of policy tightening in the CEE region, fuelled by higher-than-expected CPI data. The forint jumped to a nine-month high after the Hungarian central bank on Monday flagged a possible rate hike in June. Hungary's central bank will hold its next rate-setting meeting on Tuesday, where it is expected to leave key rates steady ahead of a June meeting when it could deliver its first base rate hike in nearly a decade to rein in inflation. The forint strengthened to 349.20 per euro Friday morning, and hit a nearly two-year high versus the U.S. dollar at 285.84, then retreated to earlier levels and was little moved on the day. The Polish zloty slid 0.11% to trade at 4.4990 versus the euro after crossing the psychologically important 4.50 mark on Thursday for the first time since February. "Reflation tendencies, together with the ensuing pressure for interest rate hikes and the milder rhetoric of the NBP ... are making market participants to take an interest in the Polish currency," PKO BP analysts said in a note. "But deeply negative real interest rates will inhibit further declines in EUR/PLN." Elsewhere, the Czech crown edged up 0.07% to 25.481 per euro while the Romanian leu was 0.02% up at 4.9275. Stock markets firmed, with Prague's stocks outperforming the region after climbing 0.94%. Shares in Czech utility CEZ rose 2.5%, as of 0836 GMT, to hit a nearly six-year high after the Czech utility announced a hefty dividend proposal following the sale of some foreign assets. The proposed dividend is the company's second-highest in its history. CEE SNAPSHO AT MARKETS T 1037 CET CURRENC IES Latest Previou Daily Change s bid close change in 2021 EURCZK= Czech EURHUF= Hungary 0 0 EURPLN= Polish EURRON= Romanian EURHRK= Croatian EURRSD= Serbian 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2021 .PX Prague 1160.75 1149.96 +0.94% +13.01 00 % .BUX Budapest 46285.5 46261.3 +0.05% +9.92% 9 7 .WIG20 Warsaw 2132.52 2131.18 +0.06% +7.49% .BETI Buchares 11645.3 11624.8 +0.18% +18.76 t 7 3 % .SBITOP Ljubljan <.SBITOP 1108.27 1104.08 +0.38% +23.02 a > % .CRBEX Zagreb 1955.15 1953.73 +0.07% +12.41 % .BELEX1 Belgrade <.BELEX1 776.47 776.55 -0.01% +3.72% 5 5> .SOFIX Sofia 529.92 524.43 +1.05% +18.41 % Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT=R 2-year s CZ5YT=R 5-year s CZ10YT= s Poland PL2YT=R 2-year s PL5YT=R 5-year s PL10YT= s FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.70 1.00 1.33 0.36 Rep Hungary 1.23 1.47 1.65 0.89 Poland 0.36 0.52 0.73 0.21 Note: are for ask FRA prices quotes ********************************************* ***************** (Additional reporting by Jason Hovet in Prague and Alan Charlish in Warsaw)