By Marton Dunai and Dagmara Leszkowicz

BUDAPEST/WARSAW, Nov 23 (Reuters) - Emerging European

currencies were mixed on Friday on the prospect of slower

economic growth and lower interest rates, while the EU's

decision to abandon budget talks failed to move the region,

market watchers say.

Sources told Reuters that EU leaders did not reach an

agreement on a seven-year budget for the bloc, pointing to a cut

in influential EU funding for the region for the coming

years.

'Despite the negotiations fiasco, the market still believes

in an agreement on Greece, and that's why currencies have not

been hit so far,' said Jakub Wiraszka, a dealer at BRE bank in

Warsaw.

By 1602 GMT, the Polish zloty had edged down 0.1

percent while the Hungarian forint eased 0.2 percent

and the Romanian leu was virtually flat.

Bonds were little changed and stocks were mixed, with the

bourse in Prague adding 1 percent on the back of a 3

percent rise in shares in power group CEZ, the

region's largest listed company.

Markets expect Poland's central bank to cut interest rates

by a full percentage point within a year, and Hungary's rates

are also seen declining a further 100 basis points by mid-2013

after three rate cuts in the last three months.

Still, Hungarian rates are high enough for now to shelter

the forint on the short term investment opportunity, one dealer

said in Budapest.

'It's safe to invest (in Hungarian assets) on a one-year

horizon with yields as high as they are. Risk is manageable,' he

said.

'Of course, low or zero growth does haunt every country in

the region. We cannot surpass too far the rest of the European

Union. Everybody keeps talking about that.'

The Czech crown added 0.4 percent to 25.325 but

was expected to weaken and test 25.5 in coming days, one dealer

said, due to loose monetary policy. The Czech central bank's

base rate is among the lowest in the world at 0.05 percent.

The bank has said its preferred next step to loosen policy

would be to weaken the crown in the foreign exchange market, but

markets see less risk of this happening this year after recent

falls in the crown.

'There is still some verbal intervention but they have

signalled 25.000 is a significant level so they are probably

happy with these levels right now,' Raiffeisen bank dealer Roman

Fol said.

Bonds remained very illiquid and yields were little changed.

One dealer in Budapest said business would stay scarce at least

until the National Bank of Hungary's rate decision on Tuesday.

--------------------------MARKET SNAPSHOT--------------------

Currency Latest Previous Local Local

close currency currency

change change

today in 2012

Czech crown 25.325 25.423 +0.39% +0.87%

Polish zloty 4.108 4.106 -0.05% +8.68%

Hungarian forint 280.07 279.4 -0.24% +12.33%

Croatian kuna 7.556 7.534 -0.29% -0.53%

Romanian leu 4.532 4.532 0% -4.66%

Serbian dinar 112.08 112.8 +0.64% -4.58%

Yield Spreads

Czech treasury bonds

2-yr T-bond CZ2YT=RR -8 basis points to 27bps over bmk*

7-yr T-bond CZ6YT=RR -2 basis points to +57bps over bmk*

10-yr T-bond CZ10YT=RR -6 basis points to +59bps over bmk*

Polish treasury bonds

2-yr T-bond PL2YT=RR -3 basis points to +367bps over bmk*

5-yr T-bond PL5YT=RR -1 basis points to +331bps over bmk*

10-yr T-bond PL10YT=RR +1 basis points to +264bps over bmk*

Benchmark is German bond equivalent.

All data taken from Reuters at 1702 CET.

Currency percent change calculated from the daily domestic

close at 1600 GMT.

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(Reporting by Reuters bureaus; Editing by Patrick Graham)

Keywords: MARKETS EASTEUROPE/

(dagmara.leszkowicz@thomsonreuters.com)(+48 22 653 97 18)(Reuters Messaging: dagmara.leszkowicz.reuters.com@reuters.net)

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