CEE MARKETS-Hungarian forint regains ground after weeks of losses

By Krisztina Than BUDAPEST, July 16 (Reuters) - Hungary's forint led a firming of Central Europe's most liquid currencies on Monday in what market players described as a technical correction which broke a weakening trend.

By 0800 GMT the forint firmed 0.3 percent to 322.15 versus the euro, but was still the worst-performing currency in Central Europe so far this year. The forint has eased 3.5 percent this year.

The forint's fresh gains could come as a relief for the Hungarian central bank, which has pursued a loose monetary policy, keeping its main rate at 0.9 percent, and overnight deposit rate in the negative territory, even though some other central banks in the region have already started tightening.

"The forint's weakening was overdone, and now we can see a correction," said Zoltan Varga, senior analyst at brokerage Equilor in Budapest.

"I think this movement in the forint is more of a technical nature, as the currency broke a (weakening) trendline on Friday." Varga said the forint could soon firm to a range of 320.50 to 321.20 versus the euro, where the gains could then peter out.

The National Bank of Hungary last month abandoned its pledge to keep rates at record lows for years.

However, pressure on the forint -- which set record lows past 330 to the euro only two weeks ago -- could return if risk aversion hits global markets again, some market players said.

"We maintain out view ... that high volatility could remain in the market in the coming weeks and a fresh weakening in the forint cannot be excluded," analysts at CIB Bank said in a note.

They said the forint could firm past 320 to the euro by the end of the year as external market pressures ease and if the central bank tweaks its policy.

Other currencies in the region also strengthened on Monday, with the zloty firming 0.2 percent, and the Czech crown by 0.1 percent.

The dollar's rally in recent months has weighed on emerging markets and central European units.

By raising its interest rates the Czech central bank seeks to create room for easing in worse times.

Other central banks in the region have been trying to wait out until the dollar-driven volatility settles in markets. The Hungarian and Polish central banks have been the most dovish in the region.

The NBP kept policy rates on hold at 1.50 percent last week.

Poland's central bank governor Adam Glapinski said he still saw no need to change interest rates until the end of 2020, after the bank presented its newest forecast assuming lower inflation in 2018 and 2020.

The Hungarian central bank will hold its next rate meeting on July 24.

CEE SNAPSHOT AT MARKETS 0958 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech 25.8720 25.9030 +0.12% -1.28% crown Hungary 322.1500 322.9800 +0.26% -3.49% forint Polish 4.3045 4.3138 +0.22% -2.98% zloty Romanian 4.6550 4.6520 -0.06% +0.53% leu Croatian 7.3940 7.3978 +0.05% +0.49% kuna Serbian 117.9200 118.0500 +0.11% +0.49% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1086.69 1084.790 +0.18% +0.79% 0 Budapest 35589.64 35641.76 -0.15% -9.62% Warsaw 2159.87 2157.14 +0.13% -12.24% Bucharest 7944.24 7933.45 +0.14% +2.46% Ljubljana 889.80 889.45 +0.04% +10.34% Zagreb 1808.15 1807.75 +0.02% -1.88% Belgrade Sofia 626.67 627.07 -0.06% -7.50% 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 < 1.42 1.65 1.77 #N/A PRIBOR=> Hungary < 0.60 0.85 1.09 0.28 BUBOR=> Poland < 1.75 1.78 1.83 1.70 WIBOR=> Note: FRA are for ask prices quotes ************************************************** ************ (Reporting by Krisztina Than Editing by Matthew Mpoke Bigg)