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CEE MARKETS-Polish yields at three-week high, central bank holds rates

* Long-term CEE yields continue to track UST yield rebound * Polish central bank keeps record-low rates on hold * CPI eases; pressure rises on Polish central bank chief * OTP Bank, Budapest stock index approach record highs (Recasts with Polish interest rate decision, comments from Polish politicians, Czech auction) By Sandor Peto BUDAPEST, Jan 9 (Reuters) - Poland's 10-year government bond yield hit a three-week high of 2.8955 percent on Wednesday as Central European yields tracked a continuing rebound in U.S. Treasuries yields.

Local markets ignored a Polish central bank (NBP) meeting where interest rates were kept on hold as expected, with criticism of Governor Adam Glapinski stealing the show from interest rates.

Polish inflation continues to leave room for loose policy after the annual rate fell further below the NBP's 1.5-3.5 percent target to 1.1 percent in December.

The zloty was little changed near the 4.3 psychological line against the euro. It has faltered in recent days as pressure mounted on Glapinski to publish details of the pay of a key aide, after a newspaper reported it was unusually high.

"At this stage this (Glapinski's resignation) is an unlikely scenario unless the PiS (ruling party) concludes that perhaps there are too many controversies that make Glapinski a major liability," Rabobank analyst Piotr Matys said in a note.

The rate-setting Monetary Policy Council is due to hold a news conference on its policy decision at 1500 GMT.

Finance Minister Teresa Czerwinska said on Wednesday that "turbulence" around the central bank "is not supportive to how foreign investors assess us".

A PiS spokeswoman said the party would like clarity on salaries at the central bank.

If ongoing investigations and attacks worsen the governor's position and he still refuses to quit, "this in turn could undermine the credibility of the NBP and could weigh on the zloty," Matys said.

Elsewhere, a 2027-expiry bond offered by the Czech Republic at an auction drew healthy demand following the rebound in bond yields in the region since the beginning of the year.

Most currencies and equities in the region gained as appetite for risk grew in global markets, amid hopes the United States and China are inching towards a trade deal.

Budapest led gains, with its blue-chip stock index rising 0.6 percent.

The index set a one-year high in early trade and got near record highs, driven by OTP, the region's biggest independent lender, which traded at 11,770 forints, near record highs beyond 11,850 forints.

CEE SNAPSHOT AT MARKETS 1349 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 1018.76 1014.360 +0.43% +3.26% 0 Budapest 41067.38 40809.82 +0.63% +4.93% Warsaw 2332.45 2325.19 +0.31% +2.45% Bucharest 7494.67 7484.70 +0.13% +1.50% Ljubljana <.SBITOP 805.56 805.85 -0.04% +0.16% > Zagreb 1739.49 1732.66 +0.39% -0.53% Belgrade <.BELEX1 693.82 718.24 -3.40% -8.91% 5> Sofia 572.21 577.33 -0.89% -3.74% 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 2.09 2.19 2.21 2.01 (PRIBOR= ) Hungary 0.26 0.49 0.74 0.13 Poland 1.74 1.77 1.77 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto; Editing by Larry King and Mark Potter)