Central Europe Stocks Rally as Hungary Gets Bailout; Banks Soar

By Pawel Kozlowski

Oct. 29 (Bloomberg) -- Central European stocks rallied the most in a month, with benchmark indexes in Budapest and Prague climbing as much as 11 percent, after Hungary secured a 20 billion-euro ($25.5 billion) aid package to shore up its economy.

OTP Bank Nyrt., Hungary's biggest bank, surged 15 percent and Komercni Banka AS, the Czech unit of Societe Generale SA, rebounded from a five-year low. KGHM Polska Miedz SA, Poland's sole copper group, and OMV AG soared as commodity prices rallied.

The NTX Index of 30 companies in the region gained 77.63, or 9.4 percent, to 903.35 at 11:50 a.m. in Vienna, limiting this month's drop to 33 percent. Hungary's BUX Index soared 10 percent today, extending yesterday's 9.2 percent gain. The Czech PX Index advanced 9.6 percent as the Prague Stock Exchange resumed trading after a holiday yesterday.

Austria's ATX Index climbed 6.3 percent and Poland's WIG20 Index added 5 percent.

``This loan package was very good news and gave some relief to investors in the region,'' said Andras Pinter, who helps manage the equivalent of $1.5 billion at Budapest Alapkezelo in Budapest.

The International Monetary Fund will lend Hungary 12.5 billion euros, the European Union will provide 6.5 billion euros, and the World Bank will add 1 billion euros for the country, whose economy has been ravaged in the credit crisis.

Hungarian assets were battered as foreign-currency borrowing by local companies and consumers, along with slower growth, a wider budget deficit and higher government debt than elsewhere in east Europe, raised concern that the country may have difficulties in securing funding.

Banks Soar

OTP Bank rose 432 forint to 3,312 forint, trimming this month's drop to 46 percent. Komercni, the third-largest bank in the Czech Republic, gained 257 koruna, or 12 percent, to 2,450, climbing for the first time in five days. Raiffeisen International Bank Holding AG, the biggest foreign bank in Russia, added 1.65 euros, or 7.9 percent, to 22.65 in Vienna trading, snapping a three-day drop.

KGHM, the copper producer with the highest European mining output, rallied 3.3 zloty, or 13 percent, to 28.5, extending this week's gain to 33 percent as copper climbed for a third day.

OMV of Austria advanced 2.19 euros, or 10 percent, to 23.49, rising for a second day, while Mol Nyrt., Hungary's biggest oil company, jumped 1,410 forint, or 15 percent, to 10,840 as crude oil increased for the first time in four days.

To contact the reporter on this story: Pawel Kozlowski in Warsaw pkozlowski@bloomberg.net.