CEE MARKETS-Stocks extend losses as Trump's tariff's kick in

BUDAPEST, April 9 (Reuters) - Central European stocks weakened on Wednesday as U.S. President Donald Trump's "reciprocal" tariffs on dozens of countries took effect, extending losses since the start of the tariff war.

Trump's punishing tariffs, including 20% on some EU products that took effect from Wednesday, have shaken a global trading order that has persisted for decades, raised fears of recession and wiped trillions of dollars off stock markets.

EU countries were expected to approve on Wednesday the bloc's first countermeasures, joining China and Canada in retaliating and escalating the trade conflict.

Hungary's blue chip index .BUX led losses as it shed 2.3% while Prague .PX weakened 1.9%. Warsaw's equities .WIG20 lost 2.2%.

They had slumped 8% to 12% since the middle of last week, shedding most of this year's gains made on the back of hopes for ending the war in Ukraine. The decline for most bourses was the biggest since Russia's invasion of Ukraine in 2022, and in Prague's case, the biggest three-day fall since the COVID pandemic hit in 2020.

Currencies were mixed, with the Hungarian forint EURHUF= sliding 0.23% to trade at 408.45 to the euro, its weakest since early February.

"The euro-forint exchange rate is attempting to break through another resistance level. If the 408.50 level is significantly breached, the 410 mark could be reached within a short period, with the next resistance level appearing at 414," brokerage Equilor wrote in a note.

The National Bank of Hungary said on Tuesday that a continued tight monetary policy stance was needed as tariffs were an inflation risk and that a lasting change in tariff rules could curb Hungarian growth by 0.5-0.6 percentage points.

Last week Czech Finance Minister Zbynek Stanjura said that a trade war may cut economic growth by 0.6-0.7 percentage points this year. Polish Prime Minister Donald Tusk has said that new U.S. tariffs may reduce growth by 0.4%.

Reduced growth is a risk for central banks in the region where rate cut cycles have been put on hold.

Last week Polish central bank Governor Adam Glapinski said the bank could ease policy, shifting to a dovish stance.

On Wednesday, central banker Ludwik Kotecki said that U.S tariffs were another argument for cutting interest rates, adding he now sees 100 basis points in cuts this year rather than the 50-100 bps he expected earlier.

The Polish zloty EURPLN= eased 0.14% to trade at 4.28, near a four-month low where it fell since the start of the trade war.

"Today, the focus will be on the official introduction of tariffs by the US administration," Millennium Bank wrote.

"Therefore, after a temporary calming down, today weaker sentiment may return to the markets, which may resume pressure on the złoty," they said.

The Czech crown EURCZK= edged up, adding 0.06% to trade at 25.16 to the euro.

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