PRAGUE, Feb 5 (Reuters) - Forecasts for a massive drop in

wind generation lifted central European spot prices on Tuesday

while uncertainty in carbon markets helped keep the Cal '14

volatile, traders said.

On regional exchanges, Czech and Slovak electricity for

Wednesday surged 33 percent to 43.58 euros ($59.09) per megawatt

hour while Hungarian day ahead cleared the daily auction at

43.60 euros.

The three central European countries linked their day-ahead

markets last September, but prices have diverged frequently

since then, with Hungary often trading higher.

In the over-the-counter market, Czech day-ahead traded at

44.85 euros, representing more than a 1 euro discount to

neighbouring Germany. Day ahead in Hungary, where tighter

cross-border capacity and low Balkan water levels have affected

prices, rose to 46 euros.

Renewable supply was the big driver as data from Thomson

Reuters Point Carbon showed forecasts for wind generation in

Germany tumbling more than 8 GW to 11.8 GW.

'Wind power production is expected to drop massively

tomorrow,' Point Carbon analysts wrote. 'The bullish signal is

strongest for the first half of the day.'

Further along the curve, the Czech Cal '14 contract gave

back strong gains from the previous session, falling 10 cents to

41.35 euros on the Prague-based Power Exchange Central Europe.

Traders said the contract was volatile due to uncertainty

over whether EU lawmakers will come up with a plan to support

the carbon market and the fact many traders were away at an

industry conference in Germany.

'It's volatile now with the conference and all the political

decisions,' one trader said. 'The contract will likely bounce

around.'

In the region, the benchmark German Cal '14 contract was

unchanged at 41.90 euros in afternoon trade on Germany's EEX

exchange.

Serbian power utility Elektroprivreda Srbije (EPS) plans to

produce 35,000 gigawatt-hours (GWh) of electricity in 2013, up 1

percent from 2012 due to better use of coal-fired plants, an EPS

official said.

Serbian water levels are forecast to rise through Feb. 12,

Serbia's hydrometeorological service said in a weekly forecast.

The Freising, Germany-based Central Allocation Office GmbH

(CAO) has offered capacities for its auction for cross-border

capacity in March in the CEE region.

Poland's utilities will have 2.2 gigawatts of power offline

for planned maintenance on Thursday, data from grid operator PSE

showed.

Day ahead on Poland's POLPX exchange rose to 161.57 zlotys

($52.55)from 143.79.

Oil rose towards $117 a barrel, resuming its three-week

rally, as investor concern faded about political risks in the

euro zone that had prompted a sell-off of riskier assets in the

previous session.

The benchmark EU carbon contract, EU Allowances for December

delivery, rose more than 2 percent to 4.42 euros in

afternoon trade.

($1 = 0.7376 euros)

($1 = 3.0748 Polish zlotys)

(Reporting by Michael Kahn; editing by Jason Neely)

Keywords: MARKETS CEE/ELECTRICITY

(michael.kahn@thomsonreuters.com)(+420 224 190 443)(Reuters Messaging: michael.kahn.thomsonreuters.com@reuters.net)

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