(Repeats story published late on Monday)
* Central and Eastern Europe markets rise after steep falls
* IMF offers financial assistance to Hungary if needed
* Polish cbank says 2012 euro adoption plans may need
rethink, Czechs cautious
* Bayerische Landesbank <BLGGgg.F>'s Hungarian unit suspends
issuance of foreign currency loans
By Krisztina Than
BUDAPEST, Oct 13 (Reuters) - Eastern Europe's battered
markets recovered on Monday but financial woes prompted the IMF
to offer financial help to Hungary and set Poland's central bank
and government at odds over the latter's 2012 euro entry plan.
The crisis has highlighted the vulnerability of the region's
developing economies to market shocks and has forced politicians
to run a reality check, with Hungary reducing its public deficit
targets and cutting its economic growth forecast.
A weekend agreement by euro zone countries to shore up the
European banking sector drove stock and currency markets higher
across the region on Monday [], but ripples of the
global financial crisis continued to reverberate.
Hungary, one of Europe's most vulnerable economies due to
its high deficits and heavy reliance on external financing, was
hit the hardest in falls on Friday, with the forint plunging to
two-year lows versus the euro before rebounding on Monday.
Responding to this Monday, the International Monetary Fund
said in a statement: "We will provide technical assistance as
needed and, in the context of a supportive policy setting, are
ready to undertake discussions on possible finance assistance."
In Hungary officials are investigating potential illegal
market manipulation after last week's losses and said the IMF's
aid would be a last resort.
"We needed this offer so those who attack us see that we
have strong allies and that Hungary is not alone," Prime
Minister Ferenc Gyurcsany told a news conference. "We needed
this offer so we'd never have to resort to using it."
Hungary's MKB Bank, a unit of Bayerische Landesbank
<BLGGgg.F> said it had suspended issuing foreign currency loans
in Hungary to protect clients from currency swings.
It was the first, and so far isolated, sign that the global
crisis may curb foreign currency lending that has boosted
consumption and growth in some eastern European states.
EURO TARGETS
Hungary abandoned a proposal to cut taxes due to the crisis
and took measures to allow more bond buying after its market
seized up last week.
It has no euro target date at the moment, but on Sunday
Gyurcsany proposed that Hungarian political and economic leaders
should hold a "national summit" to adopt a plan to enter the
euro zone and work out a long-term economic programme.
Meanwhile, some Polish and Czech officials sent more
cautious signals, particularly in light of reforms still
necessary to prepare for joining the euro zone.
"The current situation prompts a rethink of the euro entry
date," Polish central bank chief Slawomir Skrzypek told daily
Rzeczpospolita in an interview.
However, Prime Minister Donald Tusk, who launched the 2012
euro goal last month, disagreed: "Poland would feel safer if it
were even more closely integrated with the EU by joining the
euro zone... I will propose as ambition a schedule as possible,"
he said.
Many economists have already said the target is unrealistic
in the face of domestic political obstacles.
The Czech government, which has not set a date for entry,
said Prime Minister Mirek Topolanek had agreed with analysts any
relaxation of the Stability Pact rules governing the euro in
light of the market turmoil would hurt confidence in the euro
zone.
"It also raises new questions over the time horizon of
replacing the Czech crown with the euro," the government said.
RISKS REMAIN
The region's central bankers also moved to reassure markets
and depositors that their countries' banking sectors were stable
and had sufficient liquidity to weather the crisis.
Hungary's OTP <OTPB.BU>, the region's largest independent
bank, rallied after its stock plunged on Friday. Warsaw's
finance minister said the government would approve a bill upping
bank deposit guarantees to 175,000 zlotys ($67,020).
Poland's central bank also said it would discuss measures to
aid the banking system at an unscheduled meeting of its Monetary
Policy Council (MPC) later on Monday.
But the Czech Finance Ministry said it was not planning any
rescue package for the banking sector because none was needed.
Analysts have slashed growth estimates across the region as
a collapse in demand from the euro zone for the region's exports
takes its toll. They said less access to credit may also hurt,
especially for those countries most exposed to foreign lending.
"CEE markets still look very fragile, and we continue to see
a particular risk in the Baltic States, Romania, Bulgaria,
Ukraine and Hungary," Danske Bank said.
"(We) are (also) becoming increasingly concerned about
contagion to the 'healthier' economies in the region, such as
Poland and the Czech Republic."
(Reporting by Reuters bureaux in Warsaw, Prague and
Budapest, writing by Krisztina Than; editing by Patrick
Graham/Toby Chopra)
