CEE MARKETS-Biggest drop in central Europe's equities in years deepens in tariff fallout

BUDAPEST, April 7 (Reuters) - Stock markets plummeted across central Europe on Monday, adding to the biggest drop in several years after President Donald Trump announced steeper-than-expected U.S. tariffs last week, stoking fears of accelerating trade wars and a global downturn.

Hungary's blue chip index .BUX was down 6.6% by 0730 GMT, its lowest since November 2024. Warsaw's equities .WIG20 dropped 5.7% and were trading at their weakest since January. Prague .PX lost 7.2%.

Warsaw had already shed more than 10% last week and Prague almost 8% - their biggest weekly drop since the start of the global COVID pandemic in early 2020.

Budapest dropped more than 9% last week, its biggest weekly loss since Russia's invasion of Ukraine in 2022.

The falls come after Budapest's and Prague's indices had gradually climbed to all-time highs over the past two years, touching fresh peaks days before the tariffs were announced. Warsaw's stocks were at a nearly 14-year high before the market rout started.

The tariffs add risks to central Europe's economies that have been in recovery mode since an inflation surge of recent years. While the region does little direct trade with the U.S., it relies on exports to major U.S. trading partners in Europe like Germany, so will feel a strong indirect impact from the tariffs.

Currencies also extended losses on Monday, with the Hungarian forint EURHUF= down 0.4%, trading at 408.2 versus the euro, its weakest since early February.

"We.... do not believe that the CEE region is past the sell-off yet," ING wrote in a note.

"The Polish zloty and Hungarian forint are particularly exposed, PLN due to positioning, valuations and a dovish turnover for the National Bank of Poland; the HUF due to usual sensitivity to global markets and highest exports to the US," they added.

The Polish zloty EURPLN= slumped to its weakest level since early December, shedding 0.6% against the euro to 4.29, counting from its Friday local close at 4.2635. It has turned negative year-to-date, retreating from a 10-year high hit in late February.

The Czech crown EURCZK= sat at a 2-1/2 month low , down 0.1% since Friday's local close at 25.239 per euro but off its lows around 25.300 hit in after-hour trading on Friday. The crown's 1.5% fall last week was its biggest in three years.

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