Hungarian government bond yields traded around their lowest for several weeks on Thursday, withstanding a rise in yields in core markets and Central Europe ahead of an auction of bonds in Budapest. The sale could draw healthy demand in a market which became oversold in the past months, even though fears of a global trade war tainted the mood in world markets, traders said. "The (Hungarian) market is still oversold and under-positioned," the trader added. "Auction yields could stay at secondary market levels due to the worsened (global) mood instead of dropping 3-5 basis points below them," one Budapest-based fixed income trader said. The offer side strengthened a bit in early trade, but bond yields stayed at their previous close, and lower by 2-3 basis points from Wednesday's fixing. The yields were at multi-week lows, despite a rise in yields in the United States, Germany, or in Poland. The yield on the 10-year benchmark paper, trading at 3.26 percent, was at five-week lows, down more than 50 basis points from two-year highs reached early this month. With the Hungarian central bank keeping interest rates at record lows, a rally of the dollar and U.S. debt yields in the second quarter hit Hungarian assets particularly hard amid a sell-off in emerging markets. This month's rebound strengthened the forint from record lows set beyond 330 versus the euro. It traded at 324.61 at 0807, shedding 0.2 percent, just like the zloty. The crown eased 0.1 percent to 25.872, even though the biggest rise in Czech producer prices in 14 months in June underpinned expectations that the central bank will need to increase interest rates further to fight inflation. In regional equities markets, Budapest's and Prague's main indices were steady, while Bucharest led a decline of most other indices in the region, shedding 1.2 percent. It was knocked down by OMV Petrom and Romgaz , which fell 2.8 and 3.5 percent, respectively, after Romania's government said it planned to lower and cap natural gas prices by 2021. State-owned companies like Romgaz have also been hit by a requirement to pay higher dividends. Lower gas prices might cut those state revenues, while they may reduce inflation. The plan could negatively affect gas producers, Banca Transilvania analysts said in a note. "Moreover, the draft does not take into consideration any differences between households and industrial consumers, which generates an even worse context for local producers than the one before last deregulation," they added. The leu traded steady at 4.6547 versus the euro. CEE SNAPSHOT AT MARKETS 1007 CET CURRENCI ES Latest Previous Daily Change bid close change in 2018 Czech <EURCZK= 25.8720 25.8550 -0.07% -1.28% crown > Hungary <EURHUF= 324.6100 324.0300 -0.18% -4.22% forint > Polish <EURPLN= 4.3175 4.3088 -0.20% -3.27% zloty > Romanian <EURRON= 4.6547 4.6545 -0.00% +0.54% leu > Croatian <EURHRK= 7.3950 7.3910 -0.05% +0.48% kuna > Serbian <EURRSD= 117.8800 117.9700 +0.08% +0.53% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2018 Prague 1088.27 1087.360 +0.08% +0.94% 0 Budapest 34759.35 34720.31 +0.11% -11.73% Warsaw 2138.07 2149.12 -0.51% -13.13% Bucharest 7904.26 7990.15 -1.07% +1.94% Ljubljana <.SBITOP 880.79 882.67 -0.21% +9.23% > Zagreb 1794.18 1795.49 -0.07% -2.64% Belgrade <.BELEX1 736.29 742.52 -0.84% -3.09% 5> Sofia 628.34 628.47 -0.02% -7.25% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.0870 0.0580 +173bps +7bps R> 5-year <CZ5YT=R 1.5370 0.0080 +180bps +0bps R> 10-year <CZ10YT= 2.1000 -0.0020 +175bps -1bps RR> Poland 2-year <PL2YT=R 1.6270 0.0040 +227bps +1bps R> 5-year <PL5YT=R 2.5040 0.0170 +277bps +1bps R> 10-year <PL10YT= 3.1550 0.0360 +280bps +3bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 1.44 1.65 1.77 1.18 <PRIBOR= > Hungary 0.44 0.69 0.85 0.26 Poland 1.73 1.78 1.80 1.70 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto, Editing by William Maclean)