(Updates with full report)
BUDAPEST (Thomson Financial) - Budapest shares closed sharply lower in solid trade, but pared morning losses as buyers took advantage of panic selling brought on by jitters in the US sub-prime mortgage market.
The BUX Index of leading shares closed down 1.4 pct at 28,854.46 points. Equity volume was roughly in line with daily average this year of 38 bln forints.
The Hungarian currency extended losses as investors dumped forint-based assets; the euro was up 0.24 pct to 251.71 forints while the US dollar climbed 0.17 pct to 183.67 forints.
'Foreign investors used this morning's fall as a buying opportunity, getting into MOL, OTP and Richter which all opened much lower,' said Peter Galbavy, a trader at Budapest-based Takarek Bank.
OTP, Hungary's largest bank and a bellwether for sentiment, lost 2.01 pct to close at 10,260. Rumours Russian investors are building a significant stake in the company were among factors which drove the stock to nearly 11,000 forints recently.
Stock of oil and gas firm MOL, Hungary's largest company, dropped 1.99 pct to 28,300 forints, with losses mounting as analysts say a hostile bid from Austria's OMV seems less likely and give mixed signals over the company's recent foray into Italy with the purchase of refining and marketing company IES.
Drug maker Richter was down 0.92 pct to 37,355 forints after shooting up around 4 pct in the last session as the company's second quarter earnings, out yesterday, were not as bad as predicted.
Magyar Telekom, the former incumbent telecom company, was the only blue chip to buck the trend, edging up 0.84 pct to 964 forints.
Dealers and fund managers said there may be further falls as losses in the US sub-prime mortgage market, where high risk housing loans are repackaged and sold, are causing funds to reduce riskier positions in emerging markets.
'Nobody knows how far this will go, there is a bit of panic at the moment,' said a Prague-based trader. 'Investors will have to get clued up about this sub-prime mortgage issue and its effects in Europe.'
Guenter Faschang, who helps manage a 231 mln eur Central European equity fund at Swiss bank Vontobel, said a 'big correction' in emerging markets was likely in the weeks ahead.
'Emerging market equities have rallied since 1998,' he said. 'If you look at the correction over the last few days the indexes have lost what they gained in the last two weeks. There could be a long way to go (down).' edward.krudy@thomson.com ek1/ajb//cmr COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
© 2007 AFX News
