Central European shares close lower after U.S. jobs data; banks hit UPDATE

(Updates with full report)

PRAGUE (Thomson Financial) - Central European shares slumped to end the day lower after data showed the U.S. unemployment rate in May jumped by the largest amount in more than two decades, pushing blue-chips stocks off earlier highs.

Indices turned negative in late trade, with the WIG 20 in Warsaw dropping 0.85 percent to close at 2,864.57 points, Prague's PX falling 1.31 percent to 1,632.6 points and the BUX in Budapest losing 1.43 percent to 21,977.58 points.

Most major regional banks such as PKO BP, OTP and Erste were among main fallers, while energy stocks held the best, dealers said.

'Falls were across the board, but financial stocks were mostly hit' as inflation fears grow, said Ronald Schubert of Patria Finance.

In Warsaw, Bank BPH rose 4.8 percent, jumping by as much as 7.5 percent after the company confirmed it had received approval from Poland's financial regulator for a merger with General Electric Co. unit GE Money.

PKN Orlen turned lower to close 0.7 percent down. Shareholders on Friday voted for a 1.62 zloty per share dividend from 2007 profit, or 25 percent of last year's bottom line, after the Polish state treasury, PKN's largest shareholder, filed a motion to do so against the management's proposal for no payout.

Blue-chip lender Bank Zachodni WBK finished 1 percent up but off earlier gains of 2 percent after its chief executive said the bank's strategic investor, Allied Irish Banks, is in talks aimed at clearing the way for a buyout of one of the other major investors in the Polish banking sector.

Poland's largest phone operator, France Telecom-owned TPSA, fell 0.7 percent to 20.74 zlotys after JP Morgan cut its target price for the stock to 24.5 zlotys from 25.0, as it sees no trigger that could make the stock break beyond that level.

CEZ dominated trade in Prague, closing 0.15 percent higher after gaining almost 2 percent in earlier trade after Wood & Co. upgraded the regional energy giant to 'buy' with a raised target price of 1,530 Czech crowns on the back of rising electricity prices and the group's shift to lower CO2 emitting sources.

Coal miner New World Resources (NWR) added 1.6 percent and petrochemical group Unipetrol rose 3 percent, helped by speculation of a share buyback, dealers said.

Zentiva turned negative in afternoon trade before finishing flat. Thursday's annual general meeting approved a 7.4 crowns per share dividend on 2007 profit, although a resolution to appoint a representative from the drug maker's second largest shareholder Generali PPF Holding to the board failed.

Insurance joint venture General PPF, together with Czech investment group PPF, holds a 19.2 percent stake in Zentiva, and PPF last month announced its intention for a 950 crowns per share takeover bid.

Budapest shares fell behind losses for the exchange's largest blue-chips.

Oil and gas giant MOL and Hungary's leading lender, OTP Bank, which make up two thirds of the bourse, dropped 0.4 percent and 2.4 percent respectively, while Magyar Telekom shed 1 percent. [e-mail] [phone] jrh/rw/jrh/rw COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.