(Add comments, update numbers) By Jason Hovet PRAGUE, October 7 (Reuters) – The zloty gave up some gains on Thursday after the governor of Poland’s central bank said policymakers would watch the effects of a rising interest rates for a long time and refused to engage in a tightening cycle, making the currency shine. The Polish central bank surprised markets on Wednesday when it raised its key rate by 40 basis points, turning to a stricter policy sooner than expected. The move boosted the zloty to more than 1% gains on Wednesday. But some of those gains were lost on Thursday, as Governor Adam Glapinski told reporters the bank should be careful with the tightening. The zloty fell in its afternoon press conference and was trading down 0.4% on the day at 4.574 per euro at 1456 GMT, falling from a more than three week high . The hike, pushing Polish rates up close to zero, means that most central European central banks have turned to tighter policy to dampen a rise in inflation due to global supply issues and the rising energy costs, as well as increasingly recovering domestic demand and tight labor markets. Poland’s central bank had previously shown the greatest reluctance to lift borrowing costs as it feared an ongoing post-pandemic recovery. The Czech and Hungarian central banks launched tightening cycles in June. Romania followed with a rate hike on Tuesday this week, despite the rapid rise in COVID-19 cases in the country and an ongoing government crisis. The pace at which rate hikes will come remains a key question, with tightening expected to boost currencies next year, according to a Reuters poll this month ahead of the Polish rate decision. The leu is the exception as Romania faces political uncertainty and high twin deficits. On Thursday, the Hungarian forint had gained 0.1% by late afternoon and the Czech crown was down to 25.425 per euro. Analysts say the strengthening will be dampened by a strong dollar, reducing appetite in emerging markets, as investors expect the US Federal Reserve to start reducing asset purchases that will lay the groundwork for an exit from its low rates. The pressure was already visible, with the zloty losing 1.7% last month ahead of Wednesday’s rate hike. SNAPSHOT OF EEC MARKETS T 1656 CET CURRENCY Last daily bid closing variations in 2021 EURCZK Czech EURHUF Hungary 0 0 EURPLN Polish EURRON Romanian EURHRK Croatian EURRSD Serbian 0 0 Note: calculated from 1800 daily variation CET STOCKS Last daily variation previous change 2021 .PX Prague 1366.28 1363.59 +0.20% +33.02 00% .BUX Budapest 53812.8 53305.1 +0.95% +27.80 4 6% .WIG20 Warsaw <.wig20> % .BETI Bucares 12,746.9 12,633.7 +0.90% +30.00 t 1 2% .SBITO Ljubljan <.sbito p a> % .CRBEX Zagreb <.crbex> % .BELEX Belgrade <.belex> .SOFIX Sofia <.sofix> % BONDS Yield Yield Spread Daily variation (bid) vs Bund variation of Czech spread CZ2YT = 2 years CZ5YT = 5 years CZ10YT s Poland PL2YT = 2 years s PL5YT = 5 years s PL10YT s FRA 3×6 6×9 9×12 3M Czech interbank Hungary Poland Note: FRA quotations are for the asking prices *** **************************************** **** ********* ********* (Reporting by Jason Hovet in Prague, additional reporting by Alicja Ptak in Warsaw; Editing by Krishna Chandra Eluri and Steve Orlofsky)