By Anita Komuves
BUDAPEST, July 20 (Reuters) - Central European stocks were mixed on Monday and currencies were little changed as investors watched EU leaders struggle to strike a deal on a coronavirus recovery fund at a summit that has been dragging on since Friday.
Signs emerged on Monday that leaders of northern European Union countries were willing to compromise on how to carve up the recovery fund. The meeting was adjourned on Monday until 1400 GMT.
"Markets expect a deal, and if it does not happen, that could mess things up," an FX trader in Budapest said.
"Besides, the Hungarian forint could be moved by what happens at the central bank meeting tomorrow, and markets will be watching whether the NBH touches any of its other tools besides the base rate," he added.
The bank is expected to cut its base rate by 15 basis points to 0.6% at the meeting, according to a Reuters poll of analysts.
The forint EURHUF= was up 0.3%, trading at 352.40 to the euro.
Elsewhere, the Czech crown EURCZK= edged up 0.04% to 26.625 to the euro while the Romanian leu EURRON= was little changed. The Polish zloty EURPLN= was up 0.1% on Monday, trading at 4.474 to the euro.
Poland's inflation may exceed the central bank's latest forecasts, which could prompt its rate-setting panel to consider a rate hike, central banker Lukasz Hardt said on Monday. June inflation at 3.3% was above forecasts.
The central bank, which has cut rates thrice to almost zero this year said in its inflation projection last week that it expected the consumer price index to fall to 1.5% in 2021 from 3.3% seen this year.
"NBP has cut rates significantly because of fear of deflation," Commerzbank said in a note. "This does not build up to a supportive picture for the zloty exchange rate for the coming months."
Warsaw's shares .WIG20 gained 0.6%, Budapest .BUX was largely flat and Prague .PX slipped 0.3%. Bucharest's stocks .BETI were up 0.12%.
AT 1012 CET
Note: daily change
Note: FRA quotes
are for ask prices
(Reporting by Anita Komuves in Budapest; Additional reporting by Luiza Ilie in Bucharest; Editing by Vinay Dwivedi)
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