* Poland announces spending rise, CEE bond yields surge * Zloty touches 6-year low vs Czech crown * Crown buoyed by PPI jump, central banker Benda comments By Sandor Peto and Alicja Ptak BUDAPEST/WARSAW, Feb 25 (Reuters) - Central European sovereign bond yields jumped and the zloty set a six-year low against the Czech crown on Monday after Poland's ruling Law and Justice party (PiS) promised a spending spree.
The PiS said it would increase public expenditure by up to $10 billion a year, raising child subsidies, pensions and spending on transport infrastructure.
Hungarian Prime Minister Viktor Orban announced new benefits for families two weeks ago, and plans economic incentives to counter an economic slowdown elsewhere in the euro zone that has been holding back robust growth in Central Europe.
Parties across Europe are looking ahead to European Parliament elections in May, and Poland is also due to hold a parliamentary election later this year.
The yield on Poland's 10-year benchmark bond jumped above 3 percent before retreating to 2.75 percent by 1000 GMT, up 9 basis points from Friday.
The new measures could boost Poland's budget deficit to 2.2-2.5 percent of economic output next year, against previous expectations of 1.9 percent, ING analyst said in a note.
Bank Millennium analysts said the deficit could approach 3 percent, the European Union's limit, and may even exceed it in the long run.
Hungary's 10-year yield rebounded to 2.69 percent from Friday's 2.62 percent.
The rise may have been caused by a combination of technical factors and the impact of the Polish increase, Budapest-based ING analyst Peter Virovacz said.
The size of Hungary's upcoming stimulus package is not known. Worries over the budget are unlikely, given that Fitch upgraded Hungary's sovereign rating just on Friday, a week after a similar move from S&P, he said.
The forint was down a shade to 317.9 against the euro by 0946 GMT.
The zloty shed 0.1 percent to 4.339, moving closer to the weak end of the past seven months' narrow 4.25-4.35 range.
Against the crown, the zloty touched a six-year low at 5.8972. Last week it hit its weakest level against the forint since 2017.
That divergence has been driven by expectations of monetary tightening in Budapest and Prague, while the Polish central bank is seen keeping rates on hold this year and beyond.
Expectations of Czech rate hikes were reinforced by a strong 2.9 percent annual rise in industrial producer prices in January and comments from rate setter Vojtech Benda, who said a no-deal Brexit could prompt a rate hike.
"Besides this (producer prices), the economy showed unusually strong growth in the last quarter," said Viktor Zeisel, head economist at Komercni Banka. "These are the reasons why we re-evaluated our expectations and now expect the CNB will raise rates at its March meeting." CEE SNAPSHOT AT MARKETS 1046 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech