CEE MARKETS-Zloty near 3-year low, Warsaw stocks retreat further

BUDAPEST, Nov 3 (Reuters) - The zloty hovered near a three-year low on Tuesday and Warsaw's blue-chip stocks index retreated for a third day after hitting record highs, with investors focused on US midterm elections as well as Polish political tensions and an interest rate decision.

• The Polish zloty was down 0.1% at 4.4234 per euro, near a three-year low of 4.429 at the start of the trading week

• "The domestic currency has been weighed down by an increase in the risk premium - linked to political and institutional factors in Poland - from the dispute surrounding the Constitutional Tribunal," PKO Bank wrote in a note

• "On Tuesday, investor attention will be focused on the U.S. midterm elections and the prospects for de-escalating the conflict in the Middle East," they added.

• Central Europe stocks fell, with Warsaw .WIG20 shedding 1.2%. The index is down over 4% since Friday and on course for its biggest three-day drop since March

• Markets were watching for developments in a battle between President Karol Nawrocki and Prime Minister Donald Tusk's pro-European government over control of the judiciary

• Tensions came to a head last week when the president of the Constitutional Tribunal, allied with Nawrocki's nationalists, was suspended and crowds gathered outside the court in support of him

• Investors also awaited a Polish rate decision on Wednesday, with a Reuters poll forecasting the National Bank of Poland to keep its main rate at 3.75%

• In the Czech Republic, the central bank is almost certain to raise its main rate to 4.00% from 3.75% on Thursday

• The dollar dipped while Treasury yields edged higher as voting began in US midterm elections, keeping trade cautious

• The Czech crown was 0.1% lower and trading at 24.345 to the euro while the Hungarian forint was down 0.1% and trading at 364.65 per euro

• Romania raised €4.5 billion on foreign markets on Monday, Thomson Reuters IFR data showed, in its first eurobond sale since February, following the formation of a new government in October after a political crisis

• Romania is rated in the lowest rung of investment-grade by all three major agencies, with negative outlooks

• Romania's leu edged down 0.1% to 5.3405 to the euro.