(Repeats story published late on Tuesday)
* Romania asks EU executive for aid to avoid crisis
* European Commission says ready to provide support
* Hungary's cbank says it may have intervened, boosts mkts
* Moody's says emerging European states not all the same
By Radu Marinas
BUCHAREST, March 10 (Reuters) - Romania asked the EU's
executive for aid on Tuesday to save it from a possible
financing crisis, making it the latest member of the 27-member
bloc to cry for outside help against the global economic storm.
Its plea coincided with a signal by Hungary's central bank
that it may have sold euros in the open market, boosting the
forint and other currencies that have been battered since the
global crisis hit emerging Europe last year.
Brussels was quick to reply, saying it is ready to offer
aid.
"The EU Presidency and the Commission express ... readiness
to support Romania in avoiding risks of increasing market
pressures and in achieving the orderly unwinding of imbalances,"
the European Commission said in a statement.
All of central and Eastern Europe is scrambling to stop an
evaporation of foreign funds that has caused Hungary and Latvia
to grab International Monetary Fund-led lifelines, raised the
risk of lending default, and sparked some public unrest.
Romania's finance ministry said it and the central bank had
started talks with the Commission, the IMF and other
institutions to seek "medium-term foreign financial assistance,"
code-language for a financial bailout.
It followed a call on Monday by President Traian Basescu for
popular support for belt-tightening measures and an IMF loan.
An EU source familiar with the talks said an agreement could
be reached very quickly.
"Negotiations will start very soon. When they are concluded
will depend on conditions to be proposed for the aid package and
whether the Romanian government accepts right away," the source
said.
An IMF mission will arrive in Bucharest on Wednesday for two
weeks. Mihai Tanasescu, Bucharest's representative to the Fund,
said he saw a potential programme running at least two years.
The European Commission has pledged to help struggling
economies in the bloc's eastern wing on an ad hoc basis. But
lacking broad support, it has baulked at a wider plan to cover
the region as a whole and has so far let the International
Monetary Fund lead bailout packages. Such deals require
austerity steps that are all the more unpopular because they cut
state spending in countries already facing a collapse in growth.
On Tuesday, EU finance ministers backed a call from the IMF
to double its crisis funds to $500 billion, with an emphasis
that states like China and Saudi Arabia could pay a big share.
BELT TIGHTENING
There have been no details on a potential bailout, but
economists say it could amount to around 20 billion euros, near
the $25 billion of IMF, EU and World Bank money agreed in a
bailout of Hungary last October.
Romania's centre-left government, however, may yet struggle
to meet the IMF's requirements, bound to include tough spending
cuts for the country of 22 million.
"A smooth process should not be taken for granted,"
Citigroup said in a report. "The mettle of the coalition
government is likely to be tested by the difficult decisions
ahead."
The leu, which has lost 18 percent since last summer but has
been stable in recent weeks, edged up but still trailed gains of
as much as 1.9 percent in the forint, the Czech crown and Polish
zloty following the Hungarian central bank statement.
"We are also active in the market, which means we buy
forints against euros, but as to when and how much, as to how
much we did yesterday and whether we did anything at all or what
we are doing today -- we have not commented on that and will not
comment on it in the future either," Hungarian central bank
Governor Andras Simor told TV2 television.
The bank said after a special meeting on Sunday it would
start to channel EU funds into the market and was ready to use
its entire tool kit to help the forint, but it was not clear if
Simor was referring to EU funds or an actual intervention.
Ratings agency Moody's also said emerging European states
should not be treated as if pressures on their credit-worthiness
were uniform. Moody's sparked a region-wide sell-off last month
after warning its banks could face ratings downgrades.
TENSION GROWS
After several years of booming growth, the 10 ex-communist
states that have joined the EU since 2004 have been walloped by
the economic crisis due to the dearth of foreign financing as
well as a collapse in western demand that has hammered exports.
The assets sell-off has cut up to a third off the value of
floating currencies like the Polish zloty and put governments
with units pegged to the euro under pressure to devalue, a move
that would hit millions who took loans in euros and Swiss francs
in the belief they would soon join the euro zone.
Social unrest, including violent protests in Bulgaria and
Latvia, has risen in some countries, and the latter country's
government was forced to step down last month.
(Additional reporting by Nerijus Adomaitis and Krisztina Than;
Writing by Michael Winfrey; Editing by Kenneth Barry)
