BUDAPEST: Central European equities mostly eased on Monday as a drop in crude oil prices hit energy shares while worries over Italian banks ahead of the country's looming referendum hurt the financial sector.
Italian Prime Minister Matteo Renzi, who wants to bail out troubled banks, could resign if voters reject a constitutional amendment at Sunday's referendum.
Oil prices fell on expectations that OPEC oil producers will not agree on output cuts at this week's meeting to consider implementation of proposals made in September.
Prague's main stock index was down 0.4 percent by 1518 GMT, with Erste Bank shares falling by 1.8 percent.
Warsaw's blue-chip index fell by 1 percent, with shares in PKN Orlen, Poland's leading oil refiner, shedding 0.8 percent.
Polish state-run utilities gave up ground after Friday's surge after Energy Minister Krzysztof Tchorzewski said that the companies would not be expected to invest more money to support the country's troubled coal sector.
Electricity producer PGE shed 3.6 percent, leading the fall of Polish stocks.
In other markets, the region's main currencies eased as the dollar rallied against the euro.
The forint touched a three-month low at 311.30 against the euro, but stayed close to the 310 mark around which it has hovered for months.
Regional government bond yields, boosted by US interest rate expectations after Donald Trump's election vistory, retreated on Monday, tracking euro zone and US peers.
Poland's 10-year yield dropped 5 basis points to 3.5 percent while the corresponding Hungarian yield fell 4 basis points from Friday's fixing to 3.41 percent.
"The Italian referendum is a risk, (but) the decline in oil prices can reduce inflation," one Budapest-based fixed-income trader said. "The government bond market has weakened so much (in the past weeks) that some consolidation was timely," he added.
Romania's 10-year yield was flat, with the bid/ask mid-point at 3.43 percent.
"However, with risks of fiscal slippages in 2017, we believe Moody's will likely refrain from upgrading Romania on Friday, after changing the outlook to positive almost a year ago," ING analysts said in a note, adding that the leu could tread water before the Italian vote and the US Federal Reserve's December meeting.
Raiffeisen analysts said that robust demand at Hungary's government bond auction last week underpinned their view that Hungarian bonds offer better value than Polish and Romanian counterparts.
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