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CEE MARKETS-Zloty retreats, region seen growing despite mixed PMIs

(Corrects para 2 to show that factory activity (rather than the index) fell for a fourth straight month) * Dollar's rise weighs on CEE, but only zloty weakens * Polish PMI below forecasts, Czech PMI meets expectations * Q4 GDP breakdown figures underpin growth prospects * OTP stocks drop on profit taking, MSCI changes By Sandor Peto BUDAPEST, March 1 (Reuters) - The zloty retreated from three-week highs against the euro on Friday after Poland released weak factory activity data and a rebound by the dollar weighed on emerging-market currencies.

Poland's factory activity, measured in the purchasing managers' index (PMI) for manufacturing, fell for a fourth straight month in February to 47.6, below the 48.2 expected by analysts in a Reuters poll.

The zloty slipped 0.1 percent to 4.3053 versus the euro by 0944 GMT. Santander Bank Polska analysts said in a note that the performance of the dollar would guide the zloty in the session rather than the PMI figures.

Dollar buying in global markets often caused a selling of the region's currencies in the past year, and the dollar gained on Friday as a rise in yields drew investors to U.S. Treasuries.

The forint and the crown resisted the pressure. The Hungarian currency tested 9 1/2-month highs against the euro. The Czech currency traded near Thursday's five-week highs.

Prague reported factory activity slowed in February, as expected, while Hungary's own PMI rose to 55.7 in February, above the 50 mark that separates growth from contraction.

Fourth-quarter economic output figures, released in Warsaw on Thursday and in Budapest and Prague on Friday, confirmed continuing growth. Consumption and investments are diving the gains, but a slowdown in Western European export markets somewhat clouds the outlook.

The Czech figures leave unclear whether the Czech central bank will raise interest rates at its meeting on March 28, a day ahead of Britain's planned exit from the European Union if it is not postponed, analysts said.

"The favourable development of the Czech economy and increase in inflationary pressures at the beginning of this year creates room for another hike," Erste analyst Jiri Polanski said.

But the bank is likely to wait for more economic data in light of several risks, including economic slowdown in the euro zone and possible further tariffs on imports in the United States, he said.

The region's main equity indices cautiously tracked gains by their Western European peers, led by a 0.4 percent rise in Prague Budapest bucked the rise. Its blue-chip index shed a quarter of a percent as profit-taking drove OTP shares lower, even though the region's biggest independent lender reported record profits for 2018.

"MSCI is increasing the weight of Chinese shares in its indices, and that may weigh on stocks (in the region)," said Equilor brokerage analyst Zoltan Varga.

CEE SNAPSHOT AT MARKETS 1044 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 1075.93 1071.680 +0.40% +9.06% 0 Budapest 40235.08 40333.04 -0.24% +2.80% Warsaw 2335.83 2332.23 +0.15% +2.60% Bucharest 7679.01 7675.21 +0.05% +4.00% Ljubljana <.SBITOP 844.19 844.01 +0.02% +4.96% > Zagreb 1795.67 1798.98 -0.18% +2.68% Belgrade <.BELEX1 691.63 690.29 +0.19% -9.20% 5> Sofia 586.37 585.37 +0.17% -1.36% 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 2.33 2.32 2.02 (PRIBOR= ) Hungary 0.39 0.63 0.85 0.15 Poland 1.75 1.75 1.75 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto, editing by Larry King)