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CEE MARKETS-Forint leads currencies lower on Nord Stream gas leak worries

       By Anita Komuves
       BUDAPEST, Sept 28 (Reuters) - The Hungarian forint led
losses in central Europe on Wednesday as currencies in the
region were pressured by the strength of the dollar and concerns
over major leaks into the Baltic Sea from two Russian gas
    The forint shed 1.17% and was trading at 411.30 to
the euro as it ceded gains from the previous session when it
firmed after a larger-than-expected 125 bps central bank rate
hike to 13%.
    The bank also said that it was ending its year-long rate
hike cycle amid a slowing economy and that it will focus on
liquidity tightening from now on.
    Wednesday's weakening was not specific to the forint and was
driven by international events, two FX traders in Budapest said.
But the central bank's move to end its rate hikes while
inflation remains on the rise could leave the currency
vulnerable to shifts in global sentiment, some analysts said.
    "Cheap FX valuation, a more cautious fiscal stance and high
carry, are supportive for FX, but are offset by the challenging
external backdrop and now limited monetary policy flexibility,"
Deutsche Bank wrote in a note.
    "We therefore see the 'forced rate hike' scenario as more
likely than an end to the tightening cycle."
    The forint, which is the most vulnerable in the region to a
rise in energy prices, slid alongside its peers on Wednesday as
global recession fears, a strong dollar and reports of the gas
leaks weighed on emerging currencies.
    Europe was investigating the leaks, which Germany, Denmark
and Sweden on Tuesday described as "attacks" on the Nord Stream
    Reports of the gas leaks "led to FX weakness across the
region and this theme can be expected to drive the market for
the rest of the week", ING wrote in a note.
    The Polish zloty weakened 0.5% to 4.8075 per euro
while the Czech crown edged down 0.02% to 24.685
versus the European common currency.
    Long-term Hungarian government bond yields also rose as they
were harried by global market worries and rising core market
yields, a fixed-income trader in Budapest said.
    The yield on the benchmark 10-year bond was about 9.73%, up
17 basis points from Tuesday's close.
                  CEE      SNAPSH   AT
                  MARKETS  OT      1043
                           Latest  Previo  Daily   Change
                           bid     close   change  in
 EURCZK  Czech    0       0               %
 EURHUF  Hungary  00      00               %
 EURPLN  Polish   EURRON  Romania  EURHRK  Croatia  EURRSD  Serbian  00      00       %       %
         Note:    calculated from          1800
         daily                             CET

                           Latest  Previo  Daily   Change
                                   close   change  in
 .PX     Prague            1144.9  1144.9   +0.00
                                2     200       %
 .BUX    Budapes           37967.  38549.  -1.51%  -25.14
         t                     53      03               %
 .WIG20  Warsaw   2       1               %
 .BETI   Buchare           10651.  10773.  -1.13%  -18.45
         st                    72      48               %
 .SBITO  Ljublja  %
 .CRBEX  Zagreb   5       3
 .BELEX  Belgrad  %
 .SOFIX  Sofia    Yield   Yield   Spread  Daily
                           (bid)   change  vs      change
                                           Bund    in
         Czech                                     spread
 CZ2YT=           ps
 CZ5YT=           0      ps
 CZ10YT           ps
 PL2YT=           ps       s
 PL5YT=           ps       s
 PL10YT           ps       s
                           3x6     6x9     9x12    3M
         Czech    Hungary  Poland   Note:    are for ask
         FRA      prices
 (Additional reporting by Pawel Florkiewicz in Warsaw, editing
by Mark Heinrich)

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