TUMBLING European currencies, which effectively increase the cost of foreign goods in the territory, will have only a mild impact on Hong Kong's external trade, economists say. But the cut in competitiveness, coupled with weak economies in the European Community, will reduce Hong Kong's exports to Europe generally - with the possible exception of the UK, which came out of the Exchange Rate Mechanism last September. In the first five months of the year, 16 per cent of Hong Kong's domestic exports went to Europe and 14.6 per cent of re-exports worth $308.75 billion. Nomura Research Institute economist Daryl Ho Hon-kit said that compared with the deutschemark's weakest value last year - about 1.60 to the US dollar - yesterday's rate of about 1.74 marks gave a depreciation of about eight per cent. Germany is the main European market for Hong Kong traders. He said: ''In the second half of 1993 I wouldn't expect to observe a significant effect in domestic shipments to European countries, especially because a depreciation of eight per cent is not very strong. ''The most crucial thing is to look at the economic performance of the EC countries. Unless they can recover, exports to these countries will be maintained at as weak a level as they are now.'' He said the five-month figures showed that European countries only contributed about 15 per cent to the total expenditure on Hong Kong exports, so any impact would be mild. Factoring in the time lag for the currency ramifications to hit trade, he expected little impact this year. In May, the last month for which detailed statistics are available, German demand for goods re-exported from Hong Kong rose 26.1 per cent year-on-year to $3.08 billion. But Bank of East Asia head of economic research Benjamin Chan Sau-san said: ''The currency crisis will adversely affect any trade activities. ''If the countries keep on supporting the ERM, they will have to keep high interest rates, which means that their pace of recovery will be slower than previous predictions. Since western European countries are our trading partners, our trade activity will definitely be affected. ''Britain has left the system and has shown a quicker pace of recovery than other European countries.'' Schroder analyst Stella Fung said it was difficult to strip out the currency implications from the broader troubles in Europe of weak economies and high unemployment. ''Weak currencies will be one factor, because they will reduce the competitiveness of foreign goods, so they will have a negative impact on Hong Kong's external trade.'' She expected the UK, which was Hong Kong's second biggest EC market and which she thought was slowly picking up, to prop up Hong Kong's trade in Europe.