By Sandor Peto BUDAPEST, Sept 17 (Reuters) - Hungary's 10-year government bond yield rose to its highest level since early July on Monday amid expectations that the central bank may tweak a swap tool that encourages banks to buy long-term bonds.

The crown, meanwhile, was the strongest against the euro since late April due to bets that the Czech central bank (CNB) will continue to increase its interest rates next week.

A pick-up in inflation in fast-growing Central European economies strengthened hawkish voices in the CNB.

In Budapest, the National Bank of Hungary (NBH) is expected to keep its interest rates at record lows at its meeting on Tuesday, but analysts said it could make hints and pace how it wants to withdraw liquidity from domestic markets.

Analysts and market participants said the bank was unlikely to touch short-term interest rates including its foreign exchange swap tool which influences them.

But it may announce cuts in liquidity provided to banks through its monetary policy interest rate swap (MIRS) tool, which some traders said could drive long-term yields higher.

"Central banks in the world generally tighten (short-term) policy (rates), and the concern is that the Hungarian central bank will not do that," one Budapest-based fixed income trader said.

"If short-term rates are not allowed to rise, tension appears at the long end of the curve," the trader added.

Ten-year Hungarian bonds traded at a yield of 3.64 percent, their highest level since July 4, and only 12 basis points below 3-year highs set on July 3, after the forint hit record lows against the euro beyond 330.

The forint traded flat at 324.91 at 0932 GMT, and some analysts said the NBH would probably not want to strengthen it further by signalling a tightening in its short-term interest rates or fx swap tool.

Inflation ran at 3.4 percent in August, above the mid-point of the bank's 2-4 percent target range, but the NBH is unlikely to get worried unless the forint weakens significantly, boosting import prices, analysts have said.

The CNB is more worried over inflation, which, running at 2.5 percent in August, stays above its 2 percent goal.

A faster-than-expected 3.3 percent rise in the August Czech producer price index reported on Monday added to the signs of inflation pressures.

The Czech crown has hit several 4-month highs against the euro in the past days, after CNB Governor Jiri Rusnok told Reuters last week that the next rate hike was close.

On Monday it set its firmest levels since April 26. At 0932 GMT it traded at 25.458, firmer by 0.1 percent.

CEE SNAP AT 1235 MARK SHOT CET ETS CURRENCIES Late Prev Dail Chan st ious y ge bid clos chan in e ge 2018 Czec n Hung nt Poli y Roma Croa Serb r Note calculated 1800 : from CET dail y chan ge Late Prev Dail Chan st ious y ge clos chan in e ge 2018 Prag .89 .46 5% % Buda 5.8 9.17 1% 4% Wars .91 .07 3% 9% Buch .01 .69 % % t Ljub Zagr .5 .99 3% 8% Belg Sofi 64 37 7% 5% BOND S Yiel Yiel Spre Dail d d ad y (bid chan vs chan ) ge Bund ge in Czech spre Republic ad Pola nd FORW RATE AGREEMENT ARD 3x6 6x9 9x12 3M interbank Czec (CZK 1.92 2.11 2.22 1.54 h FRA) Rep (PRI BOR= ) Hung (BUB OR=) Pola (PLN 1.77 1.8 1.84 1.71 nd FRA) (WIB OR=) Note are for : ask prices FRA quot es (Reporting by Sandor Peto; Editing by Toby Chopra)