Conflict between neighbouring Ukraine and Russia has slowed economic recovery in Central Europe, contributing to expectations the Polish central bank will resume rate cuts, which appeared to have ended last year.

The region's currencies, including the zloty , were little changed against the euro. Poland's 5-year benchmark bond yield , which dropped to record lows in recent days, was unchanged from Tuesday's close.

Analysts said the market would be watching industrial output data scheduled for 13:00 PM BST.

"The drop of the Poland manufacturing PMI index below 50 points in July supports our forecast for industrial output at -0.6 percent year-on-year," Raiffeisen said in a note. "A low result will be an important dovish signal for the Monetary Policy Council."

However, Tuesday's figures for Polish wages made the outlook for central bank policy less clear. They showed private-sector wages rose in July, but by an average 3.5 percent year-on-year rather than the 3.7 percent forecast by analysts.

"The data argue that the Polish economy is not weakening as much as the PMI may suggest," Germany's Commerzbank said in a note. "This makes a 25 basis points (as opposed to 50 basis points) rate cut on 3 Sept more likely now."

The Czech crown was a touch firmer on Wednesday after hitting a fresh five year low on Tuesday, the second time it had hit multi-year lows since July 31. The Czech central bank said then it would keep the crown weak into 2016, delaying a planned end to market interventions that were aimed at staving off deflation.

The bank pledged late last year to keep the crown from strengthening past around 27 per euro while letting it float freely on the weak side of that level.

The bank's Governor, Miroslav Singer, said on Tuesday that the Czech economy could expand by a decent 2-3 percent even without the help of foreign factors, referring to the weak euro zone economy.

"His comments suggest that the central bank sees no immediate need to loosen monetary policy further," Commerzbank said in a note.

* *

**************** CEE MARKETS SNAPSHOT AT 1046 CET ************

************************* CURRENCIES *************************

Latest Previous Daily Change

bid close change in 2014

Czech crown 27.940 27.945 +0.02% -2.18%

Hungary forint 313.020 313.280 +0.08% -5.13%

Polish zloty 4.181 4.184 +0.08% -0.75%

Romanian leu 4.424 4.431 +0.14% +0.81%

Croatian kuna 7.606 7.607 +0.01% +0.16%

Serbian dinar 117.200 117.320 +0.10% -2.30%

Note: daily change calculated from previous close at 1800 CET

**************************** STOCKS **************************

Latest Previous Daily Change

close change in 2014

Prague <.PX> 978.07 982.70 -0.47% -0.90%

Budapest <.BUX> 17715.56 17670.58 +0.25% -3.37%

Warsaw <.WIG20> 2441.49 2447.99 -0.27% +1.54%

Bucharest <.BETI> 7050.92 7059.41 -0.12% +8.85%

Ljubljana <.SBITOP> 802.35 797.91 +0.56% +25.17%

Zagreb <.CRBEX> 1850.30 1845.54 +0.26% +3.93%

Belgrade <.BELEX15> 614.93 615.04 -0.02% +11.48%

Sofia <.SOFIX> 543.32 545.42 -0.39% +10.57%

***************************** BONDS **************************

Yield Yield Spread Daily

(bid) change vs Bund change in

Czech Republic spread

2-year 0.213 +0.025 +022bps +2bps

5-year 0.555 +0.003 +056bps +0bps

10-year 1.385 +0.007 +137bps +0bps

Hungary

3-year 3.290 +0.020 +306bps +2bps

5-year 3.620 +0.000 +339bps +0bps

10-year 4.600 +0.010 +437bps +1bps

Poland

2-year 2.261 -0.030 +126bps -3bps

5-year 2.639 +0.004 +163bps +0bps

10-year 3.122 -0.004 +212bps -1bps

******************* FORWARD RATE AGREEMENTS ******************

3x6 6x9 9x12 3M interbank

Czech Rep 0.350 0.370 0.370 0.35

Hungary 2.220 2.270 2.370 2.15

Poland 2.290 2.165 2.160 2.65

Note: FRA quotes are for ask prices

**************************************************************

(Reporting by Reuters buros; Editing by Larry King)

By Ivana Sekularac