BRUSSELS (Belgium) - HUNGARY may become the first European Union nation to seek loans from the International Monetary Fund after the Washington-based fund said on Monday it stood ready to offer financial assistance.

The IMF said it was in close talks with the Hungarian government and EU officials on how Hungary could cope with the 'stress experienced over recent days' on the market for Hungarian state securities.

The Hungarian currency, the forint, tumbled last week to a two-year low against the euro as investors shifted money out of the country.

The EU executive has criticized Hungary for its handling of its economy. It has the largest budget deficit in the 27-nation bloc, running at 5.5 per cent in 2007.

EU finance ministers and the European Commission welcomed the IMF's move and said they would 'use all tools available' to complement IMF action and help Hungary withstand market pressures.

IMF aid usually comes with a tough prescription from the fund's officials on how a country should run its economy and pay off debt.

The forint strengthened markedly on Monday, which traders attributed to the agreement reached by euro-zone leaders on Sunday to coordinate national efforts to restore confidence as banks remain reluctant to lend to each other.

In early trading, the euro was down to 252 forints from more than 270 forints on Friday, while the US dollar weakened to 185 forints from more than 200 forints last week.

Local markets also were awaiting Prime Minister Ferenc Gyurcsany's statement after his planned meeting with financial experts on Monday. -- AP