CEE MARKETS 2-Budapest mkts hammered; zloty, crown hit lows

                                
 * Eur/dlr stop losses hit CEE currencies
                                
 * Stocks decline, led by Budapest as pension worries hit
                                
 * Cheuvreux recommends cutting Hungary exposure
                                
 
  (Recasts with Hungary markets, adds details)
                                
 By Jason Hovet
                                
 PRAGUE, Nov 26 (Reuters) - Budapest stocks hit a five-month
low and the forint lost 1 percent on Friday as Hungarian
government plans to change the pension system unnerved investors
in a region already struggling with the euro zone debt crisis.
                                
 The Polish zloty and Czech crown fell to their lowest levels
since August, tracking the euro - emerging Europe's reference
currency - as worries grew that Spain and Portugal could
eventually be forced to seek a bailout.
                                
 News from the region itself was dominated by Hungary's
centre-right Fidesz government's latest controversial policy
moves since winning power in April. [ID:nLDE6AO1TJ]
                                
 Hungarian bond yields jumped by up to 40 basis points, the
forint hit a two-month low and the Budapest stock exchange
<.BUX> lost 4 percent, extending losses from Thursday after
government detailed more plans to push private pension fund
holders back into the state pension scheme.
                                
 Fidesz's first six months in power have also been marked by
attacks on the central bank and new taxes on banks and business
that have drawn criticism from the European Union, business
groups and analysts. 
                                
 Cheuvreux recommend cutting exposure to Hungary.
                                
 "Given the complete unpredictability of the government's
decision-making process, we have decided to recommend moving out
of Hungarian assets, with the additional risk of ratings
downgrades bearing negatively ahead in our view," it said in a
regular morning note.
                                
 Hungarian losses were worsened by a drop in the euro against
the dollar to a two-month low, which triggered stop losses and
knocked out some key technical levels. The zloty fell past the
4.0 per euro level for the first time this month and -- along
with the crown -- hit its lowest since Aug. 31.
                                
 
                                
 FAST LOSSES
                                
 By 1000 GMT, the zloty <EURPLN=> bid down 1 percent at 4.022
to the euro and the crown <EURCZK=> was down 0.2 percent 24.734,
but off low of 24.825. The forint <EURHUF=> lost 1 percent to
280.11.
                                
 The Romanian leu <EURRON=> was on the weak side of 4.30 per
euro, down 0.2 percent from Thursday's close.
                                
 "Things were moving fast, there were some stop losses going
through," a Prague dealer, who declined to be named, said.
                                
 Concerns are growing that other highly indebted euro
periphery states such as Portugal or even Spain may need
bailouts after first Greece and then Ireland sought emergency
funds.
                                
 In central Europe, Hungarian and, to some extent, Romanian
markets have been regarded as most vulnerable to risk aversion
associated with the euro zone debt crisis.
                                
 But the region was being sold across the board, with Polish
bond yields rising up to 9 basis points, mostly on the long-end.
                                
 "There's a risk, it is not the end of the weakening, as lots
of investors have long positions in the Polish bonds," said one
Warsaw-based dealer. "On the other hand, the current levels are
getting more and more attractive now."

--------------------------MARKET SNAPSHOT--------------------
Currency                    Latest   Previous Local    Local
                                
                                  close    currency currency
                                
                                           change   change
                                
                                           today    in 2010 
Czech crown      <EURCZK=>   24.773   24.718   -0.22%    +6.24%
Polish zloty     <EURPLN=>    4.022    3.98    -1.04%    +2.04%
Hungarian forint <EURHUF=>  280.11   277.27    -1.01%    -3.48%
Croatian kuna    <EURHRK=>    7.42     7.421   +0.01%    -1.49%
Romanian leu     <EURRON=>    4.308    4.299   -0.21%    -1.64%
Serbian dinar    <EURRSD=>  106.91   107.03    +0.11%   -10.32%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond   CZ2YT=RR   +11 basis points to  83bps over bmk*
7-yr T-bond   CZ7YT=RR   +8 basis points to  +90bps over bmk*
10-yr T-bond   CZ9YT=RR   +3 basis points to  +99bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond   PL2YT=RR   +6 basis points to  +379bps over bmk*
5-yr T-bond   PL5YT=RR   +12 basis points to  +376bps over bmk*
10-yr T-bond PL10YT=RR   +14 basis points to  +347bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1102 CET.
Currency percent change calculated from the daily domestic 
close at 1700 GMT.

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(Reporting by Reuters bureaus, writing by Jason Hovet;
Editing by John Stonestreet)