CEE MARKETS-Currencies at 4-week lows, Hungary keeps loose monetary policy
* Hungary central bank holds fire, reaffirms loose policy * Forint, zloty, crown trade around 4-week lows * Investors watch U.S. 10-year yield testing 3 percent * Further U.S. yield rise could boost CEE LT yields-trader (Recasts with Hungarian central bank, trader comments) By Sandor Peto BUDAPEST, April 24 (Reuters) - Central European currencies traded around four-week lows against the euro on Tuesday as U.S. Treasury yields hit multi-year highs, while Hungary's central bank reaffirmed its loose policy. The forint, the Czech crown and the zloty eased less than 0.1 percent by 1311 GMT, but their fall came after a bigger drop on Monday when money flowed into dollar assets. Regional financial asset prices hardly moved on Tuesday as investors waited to see if the 10-year U.S. Treasury bill yield would breach the key 3 percent line. "If it does, in a couple of days long-end yields could go up by 20 basis points (in the region)," one Budapest-based fixed income trader said. "Even worse, if the European Central Bank issues any hawkish hints (after its meeting on Thursday)," the trader added. Higher debt yields in core markets would make the region's assets relatively less attractive. Central Europe's long-term bond yields traded around multi-week highs on Tuesday. Hungary's 5- and 10-year yields rose 2-3 basis points to 1.32 and 2.52 percent, respectively, even though the central bank repeated after its meeting that it would seek to maintain loose monetary conditions across the yield curve. The bank, led by a key ally of Prime Minister Viktor Orban, holds its first meeting since the ruling party secured a tight two-thirds parliament majority at elections on April 8. Inflation has been mild in most of the region this year. An earlier rise in the Czech Republic and a surge in Romania since late last year prompted central bank rate hikes, while Hungarian and Polish rate setters have not showed worries over inflation. The crown firmed only briefly after Czech National Bank board member Marek Mora was quoted as saying that the crown had strengthened more slowly than expected. The bank has forecast the average crown rate to firm to 24.9 versus the euro in the second quarter. It traded at 25.45 on Tuesday. The leu was steady at 4.654 against the euro after Romanian President Klaus Iohannis offered to mediate between the ruling party and the central bank in a row over inflation, which jumped to 5 percent in annual terms in March, the highest since 2013. Late last week, the leader of the Social Democrats lashed out against criticism that a surge in inflation was driven by his party's fiscal and income policies, accusing the central bank of exaggerating the impact of higher trade deficits. CEE SNAPSHOT AT MARKETS 1511 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech Hungary Polish Romanian Croatian Serbian Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1128.06 1121.470 +0.59% +4.63% 0 Budapest 38169.61 38123.45 +0.12% -3.07% Warsaw 2292.88 2291.59 +0.06% -6.84% Bucharest 8992.21 8957.03 +0.39% +15.97% Ljubljana Zagreb 1781.63 1781.25 +0.02% -3.32% Belgrade Sofia 657.24 659.10 -0.28% -2.98% 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 0.95 1.05 1.20 0.90 Hungary 0.07 0.10 0.18 0.03 Poland 1.73 1.74 1.77 1.70 Note: FRA are for ask prices quotes ************************************************* ************* (Additional reporting by Luiza Ilie in Bucharest and Jason Hovet in Prague Editing by Matthew Mpoke Bigg)