Budapest - The European Central Bank has agreed to lend Hungary up to 5 billion euros (6.8 billion dollars) to help ease credit conditions, the ECB said Thursday.

The accord will help Hungary's central bank provide extra euro liquidity in the East European nation, the Frankfurt-based ECB said in a joint statement with the Hungarian Central Bank.

Euro-denominated loans are a key source of finance in Hungary, which joined the European Union in 2004 but has not switched to the euro.

Hungary's currency, the forint, regained some of Wednesday's losses against the euro after the announcement.

Declines eased on the Budapest stock exchange, where blue-chip shares in the OTP bank and energy company MOL each lost 14 per cent on Wednesday.

Access to foreign funding has "clearly worsened" due to the freeze-up of global credit markets, heightening the risk of "persistently low economic growth," Hungary's central bank said last week.

"The domestic banking sector must be prepared to face sustained tight liquidity conditions," the central bank said in a report. (dpa)