BUDAPEST: Budapest stocks fell on Tuesday as fears of a global trade war persisted even though Asian and Western European equities regained some ground after a sell-off.

Slightly more optimistic comments from US and Chinese officials on trade talks reduced the tension, but new US tariffs on car imports from Europe remained a risk.

Vehicle production has been a key component of economic growth in Central Europe, along with a rise in domestic consumption as wages surge in the region.

The region's stock indexes underperformed London and Frankfurt. Worst was Budapest, where the main index was down 1.3% by 1330 GMT.

It dropped through the 40,000-point level, setting a 3-month low and approaching its 200-day moving average of 39,180 points.

It has been retreating from record highs in the past three weeks as the US-China trade war and worries over economic growth in Europe and elsewhere have weighed on equities.

OTP, the region's biggest independent lender, fell more than 3% on Tuesday.

Worries over the trade talks brought the share down below its 200-day moving average, which it exceeded on Friday after the bank reported a strong rise in first-quarter earnings.

Hungarian first-quarter economic output figures due on Wednesday are expected to show steady annual growth at a robust 5.1%.

But Monday's media reports that German luxury car makers Daimler AG and BMW might be putting their investments in Hungary on hold have fuelled concerns over the region's auto industry.

The companies are struggling to deal with lower demand and the threat of higher auto tariffs from the United States, the daily Handelsblatt reported.

"Auto industry has a big part in the GDP ... worries over it definitely play a role in the fall of stocks," one Budapest-based trader said.

Warsaw's and Bucharest's stock indexes were almost flat, while Prague rose 0.5%, rebounding from a 3-and-1/2-month low.

Regional currencies were mostly slightly in the red against the euro, except for the crown which drifted off Monday's 6-week lows.

Czech, Polish and Romanian first-quarter economic output data due on Wednesday are expected to show some slowdown in growth to rates which are still stronger than in euro zone economies.

The Polish and the Romanian central banks are expected to keep interest rates on hold at their meetings on Wednesday, even though they may comment on April's inflation rise.

"The probability that (Polish) inflation may touch 3% (vs the bank's 1.5-3.5 percent target) at the end of the year has visibly increased," Erste analysts said in a note.