CEE MARKETS-Czech crown keeps up gains before central bank meeting, other FX mostly stable

WARSAW, Aug 2 (Reuters) - The Czech crown firmed on Wednesday ahead of the central bank's rates meeting that may give a clearer view on how soon policymakers will start cutting interest rates, as central Europe's currencies took a U.S. credit rating cut in stride. Fitch's downgrade of the U.S. credit rating was the main focus for global markets, although the impact in central Europe was minimal in early trading, with the Hungarian forint down a touch but staying off a more than four-month low it hit in the previous session. By 0802 GMT the Czech crown had firmed 0.3% on the day to 23.8810 per euro, moving further to the strong side of the psychological 24 level that it has bounced around in the past two weeks after central banker comments signalled interest rate cuts could be coming within months. Since then, comments have been more hawkish and the crown has corrected higher, firming on Wednesday a day before the Czech National Bank meets on policy and is widely expected to hold the base rate at 7.00%, a more than two-decade high it has maintained since mid-2022. The CNB has fought against market expectations seeing a possible 100 basis points in total in cuts this year, although markets have hardly retreated in pricing sharp policy loosening. The crown traded in thinner markets on Wednesday, causing bigger moves. Similarly, the Hungarian forint meanwhile slipped 0.2% to 389.20 per euro in shallow trade, but remained off its lowest level since mid-March which it hit during Tuesday's session. "During August's vacationing season flows can really swing the market for a few days, and it seems that they exhausted themselves now for a while," a Budapest-based trader said. Elsewhere, the Polish zloty eased 0.1% to 4.4485 per euro, pulling back from a 4.40 psychological level it briefly tested on Monday. "Investors likely decided that the current levels of EUR/PLN are already too low and have started building positions for the weakening of the zloty on low holiday liquidity," ING Bank Slaski analysts wrote. The analysts, however, see the correction as short-lived and expect the zloty to once again test the 4.40 level this month. "The fundamentals behind the zloty remain favorable - especially the surplus in foreign trade - which may also encourage short-term investors to re-build their position for a fall in EUR/PLN." Stock markets in Prague, Budapest and Bucharest remained cautious, while Warsaw's bluechip index slumped 1.9% with all stocks in the red and lender mBank its biggest drag after reporting a second-quarter loss. CEE SNAPSHOT AT MARKETS 1002 CET CURRENCI ES Latest Previous Daily Change bid close change in 2023 Czech 23.8810 23.9550 +0.31% +1.16% crown Hungary 389.2000 388.4500 -0.19% +2.63% forint Polish 4.4485 4.4430 -0.12% +5.42% zloty Romanian 4.9340 4.9339 -0.00% +0.17% leu Serbian 117.1600 117.2300 +0.06% +0.12% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2023 Prague 1362.19 1360.010 +0.16% +13.35% 0 Budapest 53556.57 53823.23 -0.50% +22.29% Warsaw 2151.68 2188.77 -1.69% +20.07% Bucharest 13333.15 13373.91 -0.30% +14.31% Spread Daily vs Bund change in Czech spread Republic 2-year 5-year 10-year Poland 2-year 5-year 10-year FORWARD 3x6 6x9 9x12 3M interban k Czech Rep < 6.87 6.06 5.11 7.10 PRIBOR=> Hungary < 12.53 10.70 9.55 14.24 BUBOR=> Poland < 6.15 5.49 5.02 6.72 WIBOR=> Note: FRA are for ask prices quotes ************************************************** ************ (Reporting by Karol Badohal in Warsaw, Jason Hovet in Prague and Boldizsar Gyori in Budapest; Editing by Sharon Singleton)