CEE MARKETS-Trump oil safety assurances help steady FX

WARSAW, March 4 (Reuters) - The Polish zloty firmed ahead of the country's central bank interest rate decision on Wednesday, as Central Eastern European currencies took a breather after the U.S. hinted at securing transit of oil tankers in the Gulf amid the Iran conflict.

On Tuesday, President Donald Trump said the U.S. Navy could begin escorting oil tankers through the Strait of Hormuz, a crucial oil shipping lane in the Middle East, if necessary. He added that he had taken steps to secure political risk insurance and financial guarantees for maritime trade in the Gulf.

The zloty EURPLN= gained 0.4% against the euro to 4.2735, after hitting a more than 10-month low on Tuesday.

Poland's central bank is set to announce its interest rate decision, with analysts who were nearly unanimously expecting another rate cut in a Reuters poll closed on Monday, are now increasingly opening towards the possibility of a decision to hold it at 4%. The bank cut rates by 175 basis points last year.

According to Santander Bank Polska, which still expects the National Bank of Poland (NBP) to deliver a 25-basis-point cut, a "hold" decision would not be a surprise.

"Although just a few days ago, the market was discounting a reduction in the reference rate in the coming months to 3.50%, recent events in the Middle East and the associated inflation risk have challenged these expectations, leading to a significant correction in the priced-in reductions," it said.

Polish Forward Rate Agreement PLNFRA levels have risen 23-32 basis points from last week.

Still, a Warsaw-based currency trader said the interest rate decision was secondary to global developments.

"Honestly, the markets aren't paying much attention to it now... the Middle East is the main story," the trader said.

"I think that after Trump said, and these are just words, but he said he would guarantee insurance for these tankers and protect them, the markets recovered somewhat... We'll see if there's a second wave of panic. The night is still young, and this is only just getting started."

In Hungary, the forint EURHUF= edged 0.1% higher to 386.10 per euro, after suffering its biggest slump in two years to as low as 391.55 on Tuesday.

Analysts noted Hungary's higher exposure to energy shocks, compared to other countries in the region.

"On the one hand, as Hungary is a major energy importer, the surge in the price of gas clearly has a negative effect on the forint's performance," MBH Bank said.

"Another important reason is that in recent months investors have quickly begun to unwind their forint positions, built up due to high interest rates, in this risky environment."

Elsewhere, the Czech crown EURCZK= also edged 0.1% higher against the euro to 24.3850, settling after it hit a nearly six-month low of 24.444 in previous session.

Preliminary data released on Wednesday showed Czech inflation eased deeper below the central bank's target in February, with the headline rate falling to a more than nine-month low of 1.4% year-on-year on the back of slowing food price growth and lower energy costs.

Fallout from Iran strikes could limit room for Czech rate easing, Czech central bank Vice-Governor Jan Frait said in comments published on Wednesday.