By Jason Hovet

PRAGUE, Jan 24 (Reuters) -Hungary's forint eased heading into a central bank meeting on Tuesday, with policymakers likely set to keep interest rates stable at high levels although some in the market were seeing arguments for policy easing already.

Other central European currencies also weakened, while stock markets continued to recover some ground after softening last week.

Central Europe's rate setters have shifted policy into stable rates since the second half of 2022, wary of economic slowdowns even as inflation stays high at double-digit rates.

The shift came after heavy hiking cycles since 2021, before major global central banks like the U.S. Federal Reserve or European Central Bank started tightening.

In Hungary, the central bank has been the most aggressive, with a key policy rate at 13%, which it needed to fight inflation and buck up a forint that was hitting record lows last year. It has also lifted overnight rates and other measures to help the forint.

Citigroup said it may look to start cutting the overnight rate, and other analysts said it could test market sensitivity now.

"The focus will be on the statement as any signal of potential easing could cause currency weakness. The central bank may test the market to gauge the reaction before ultimately deciding on the forward rate path," Morgan Stanley said.

The forint EURHUF= has stayed on the strong side of 400 to the euro so far in 2023, well away from lows above 434. It traded down 0.3% on Tuesday at 396.70.

Markets have also priced in rate cuts in the Czech Republic, expectedlater this year.

The crown, helped by easing worries of an energy crunch as gas prices fall and also backstopped by a central bank pledge to intervene to prevent any sharp weakening, has traded at more than 14-year highs already in January.

It hit as high as 23.855 to the euro on Monday, touching its highest since October 2008, but was down 0.1% on Tuesday at 23.878.

In Poland, the zloty EURPLN= stayed under pressure, with some analysts seeing worry over European Union funds as a drag.

Bills needed to end EU rule-of-law disputes holding up funds are still going through parliament.

"After the government's media offensive in December, work on the amendment to the law on the Supreme Court slowed down, and the sitting of the Sejm scheduled for this week will probably not bring a breakthrough," Bank Millennium said.

"The result is a growing pressure towards a weaker zloty."

Reporting by Jason Hovet in Prague, Krisztina Than in Budapest and Pawel Florkiewicz in Warsaw; Editing by Shailesh Kuber

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