CEE MARKETS-Central Europe stocks set for biggest weekly fall in years, FX slips

BUDAPEST, April 4 (Reuters) - Central Europe's stocks were on course for their worst weekly loss in at least two years on Friday and currencies slipped to multi-week lows as U.S. President Donald Trump's sweeping tariffs rattled global markets.

Shares fell, tracking their European peers that dipped as investors grappled with prospects of a global recession. Prague .PX led losses with a 3.6% drop, while and Warsaw .WIG20 and Budapest .BUD equities were nearly 2% lower.

The main bourses have lost around 6% this week, which is the biggest loss since March 2023 for Warsaw and May 2022 for Budapest. Prague stocks have not fallen so sharply since the start of the COVID pandemic in 2020.

The European Union was hit with a 20% U.S. import tariff rate, prompting traders to increase their bets on interest rate cuts from the European Central Bank to shore up economic growth.

The penalties announced by Trump on Wednesday triggered a plunge in world financial markets and drew condemnation from other leaders reckoning with the end of a decades-long era of trade liberalization.

The Czech crown EURCZK= lost 0.5% and was trading at 25.15 to the euro, a two-month low.

Czech consumer prices ticked up 0.1% in March, keeping year-on-year inflation above forecasts at 2.7%, raising the chance the central bank will be cautious about any policy easing. The central bank paused its easing cycle on March 26, keeping the main repo rate at 3.75%.

The Polish zloty EURPLN= weakened 0.3% to trade at 4.24 per euro, its weakest level since January. The currency has lost 1.5% against the euro since Wednesday, continuing its retreat from 10-year highs hit in late February.

The National Bank of Poland has kept its main interest rate at 5.75% since October 2023, and left rates on hold this week, but on Thursday, Governor Adam Glapinski abandoned his previously hawkish views and did not rule out cutting interest rates as early as May.

"Trump's tariffs ... really shook up the global market ... And Adam Glapinski added to this, specifically when it comes to the złoty," an FX trader in Warsaw said.

The Hungarian forint EURHUF= was 0.4% weaker, trading at 404.6 to the euro, its weakest since early March, adding to its losses from the previous session.

"Markets reacted to Trump's tariffs with a wild ride... that is pressuring the forint. Markets are pricing in central bank rate cuts that could offset the economic effects of tariffs, but I do not think that has a chance in Hungary," an FX trader in Budapest said.

"This is why I do not expect further significant weakening in the forint. Hungary's interest rate will make the forint attractive soon again," the trader said.

The National Bank of Hungary left its benchmark interest rate steady at the European Union's joint-highest level of 6.5% last week and ruled out rate cuts for the foreseeable future as inflation rebounds.

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