* Currencies off post-Fed highs, leu sets 9-month low * Expectations for Dec ECB rate hike weighs on CEE fx, bonds * Leu eased through central bank's earlier tolerance line-analysts By Sandor Peto and Luiza Ilie BUDAPEST/BUCHAREST, March 17 (Reuters) - The leu led a retreat of Central European currencies and government bonds as euro zone markets priced in a likely European Central Bank interest rate hike in December.
With the region's central banks retaining loose monetary policies, regional assets could become relatively less attractive if euro zone yields rise.
ECB policy maker Ewald Nowotny was quoted late on Thursday as saying that the ECB will decide whether to raise rates before or after ending its bond purchase programme.
The comments pushed the forint and the zloty back from about 2-week highs against the euro, reached after Wednesday's less hawkish than expected Fed comments.
They regained some ground later, but at 1010 GMT were still slightly weaker from Thursday.
The leu has been particularly vulnerable this year due to worries that Romania's new leftist government will increase the budget deficit.
The currency hit a 9-month low against the euro on Friday, and, easing by 0.2 percent to 4.5665, it crossed the 4.56 line, "where it was stopped short by the central bank several times in previous years", Bucharest-based ING analysts said in a note.
"We still believe that fundamentals work in favour of a stronger RON (leu) and that the current risk balance (both internal and external) does not justify current levels," they said.
"However, we cannot ignore the possibility that the central bank might have turned more lenient towards upside EUR/RON pressures," they added.
International Monetary Fund officials are due to hold a news conference on Friday about regular consultations with the government and are expected to echo analysts' concerns that the budget deficit could overshoot targets, potentially affecting markets.
Romanian government bonds changed little. Hungarian and Polish bond yields rose by 1-3 basis points in a muted reaction to the Nowotny comments.
"(The comments) are in contrast with what the ECB said earlier, that rate hikes could come after the asset purchases end," one Budapest-based trader said.
"(A December rate hike) could be possible only if everything is nice at the French and German elections and the euro zone economy," the trader added.
The Czech crown's euro exchange rates implied in forwards contracts hovered around multi-month lows.
Czech central bank Vice-Governor Mojmir Hampl reiterated on Thursday that the bank is likely to end its cap, which keeps the crown weaker than 27 against the euro, around the middle of the year.