CEE MARKETS-Forint plunges, bond yields rise as investor nerves tested on EU funds

    (Updates with forint and bond market moves, trader comments)
    By Anita Komuves
       BUDAPEST, Nov 23 (Reuters) - The Hungarian forint
weakened on Wednesday while bond yields rose on a German media
report, which said the European Commission could recommend that
member states freeze 7.5 billion euros from three cohesion
programs earmarked for Hungary.
        The currency gave up gains from earlier in the
day and was down 0.56% on the day and trading at 409.20 per euro
by 1402 GMT.

        "The forint fell soon after the FAZ report was
published, and the bond market was also hit at the same time,"
an FX trader in Budapest said.

        German paper Frankfurter Allgemeine Zeitung reported
citing unnamed sources that European Commission officials have
concluded that Hungary has not sufficiently fulfilled its
promises on the fight against corruption and will recommend 7.5
billion euros be earmarked for Hungary be frozen.

        While Prime Minister Viktor Orban may not get all of the
money unlocked, he would likely win the Commission's conditional
approval for some 7.2 billion euros earmarked for Hungary from
the bloc's stimulus fund to help economies heal from the
COVID-19 pandemic.

        Long-term government bond yields jumped about 40-60
basis points after the report, a fixed-income trader said.

        The yield on the benchmark 10-year bond was about 8.30%.

        Budapest's stocks were down 1.58%.

        Market participants have been closely eyeing
negotiations between Hungary and the European Union over funds,
which has affected the rate of the forint, central Europe' worst
performer so far this year as it shed near 10%.

        The central bank announced an emergency rate hike last
month and introduced the quick deposit facility, which helped
shore up the forint, but a deal on EU funds is seen key for the
currency to significantly strengthen, traders and analysts have
said.

        On Tuesday, the central bank left its base rate at 13%
on Tuesday and pledged to maintain tight monetary conditions for
a "prolonged period".
    The Czech crown was flat as central bank Governor
Ales Michl said interest rates were at high enough levels at the
moment and were restricting economic activity.
    Elsewhere, the Polish zloty added 0.26% to trade
at 4.6980 versus the common currency.
                  CEE     SNAPSH   AT
                  MARKET  OT      1502
                  S               CET
                          CURREN
                          CIES
                          Latest  Previo  Daily   Change
                                  us
                          bid     close   change  in
                                                  2022
 EURCZK  Czech    0       0       %       %
 EURHUF  Hungary  00      00
 EURPLN  Polish   %
 EURRON  Romania  %
 EURHRK  Croatia  %
 EURRSD  Serbian  00      00       %       %
         Note:    calculated              1800
         daily    from                    CET
         change

                          Latest  Previo  Daily   Change
                                  us
                                  close   change  in
                                                  2022
 .PX     Prague           1237.8  1238.1  -0.02%
                               6     200
 .BUX    Budapes          44617.  45335.  -1.58%  -12.03
         t                    58      11               %
 .WIG20  Warsaw   0       5               %
 .BETI   Buchare  78      06       %       %
 .SBITO  Ljublja  8       0               %
 .CRBEX  Zagreb   5       4       %
 .BELEX  Belgrad  %
 .SOFIX  Sofia    Yield   Yield   Spread  Daily
                          (bid)   change  vs      change
                                          Bund    in
         Czech                                    spread
         Republi
         c
 CZ2YT=           0      ps
 CZ5YT=           0      ps
 CZ10YT           ps
         Poland
 PL2YT=           ps
 PL5YT=           ps
 PL10YT           ps
                  FORWAR
                  D
                          3x6     6x9     9x12    3M
                                                  interb
                                                  ank
         Czech    Hungary  Poland   Note:    are for ask
         FRA      prices
         quotes
         ***************************************
         ***********************
 (Additional reporting by Alan Charlish in Warsaw and Jason
Hovet in Prague; Editing by Shounak Dasgupta and Maju Samuel)