Vienna - After years of roaring growth, eastern Europe's economies look increasingly fragile as the global financial crisis spreads.

European Central Bank action Thursday to ease a credit crunch in Hungary was a warning that the area from the Baltics to Bulgaria is ripe for spillover. Now analysts are speculating which country might be next to come under attack.

High on the list are EU members Romania and Bulgaria and non-EU Ukraine. Across the region, there are signs that investors are more wary of an area where double-digit economic growth often seemed the norm just months ago.

"Everybody is looking at how to avoid risk, rather than looking at how to make a buck," said Lars Christensen, Danske Bank's top emerging markets analyst.

Eastern Europe has long been exposed to a possible credit crunch: the ex-communist nations relied heavily on foreign money for investment, property booms and consumer spending in the race to reach Western living standards.

The private credit boom in eastern Europe - and the banks who made the loans - stoked concern after financial markets seized up and fears of a global recession soared.

"Central and Eastern Europe is the most indebted and most leveraged region in the world," Christensen said.

If a full-blown financial crisis strikes, the economic slowdown expected to persist in the region through 2009 would likely worsen.

Hungary, an early post-communist success now mired in economic stagnation, caught the first blow over the past week as the country's financial system came under pressure.

Government bond yields soared, stocks plunged and the Hungarian currency, the forint, slumped. Many banks halted loans in foreign currencies like the euro and Swiss franc, which have been hugely popular devices in eastern Europe's debt spree.

The International Monetary Fund held urgent talks with Hungarian officials. On Thursday, the ECB stepped in with a 5-billion-euro (6.8-billion-dollar) credit line for Hungary's central bank.

Much depends on how much foreign banks will curb their eastern exposure. One bellwether will be the three Baltic nations, now in, or on the cusp, of recession after a decade of meteoric economic growth.

"The Scandinavian banks are the crucial players in this. Provided they keep the finance taps open, the Baltics should avoid a financial crisis, but there will be a long and painful recession that will entail negative growth both this year and in 2009," said Neil Shearing, an economist at London-based Capital Economics.

Investors have been reassessing risks in eastern Europe. Austria's blue-chip ATX stock index, which includes banks and industrial companies heavily involved in the region, has fallen 57 per cent since its July 2007 peak.

Balkan countries like Serbia - poor, economically struggling, politically messy and stuck with hard-to-sell state companies - stand to be among the biggest losers as investors blink and borrowing costs soar.

"Much bigger efforts will be required to attract foreign investors," Serbian central bank head Radovan Jelasic told the Vienna daily Der Standard. "Credit costs are much higher. The rosy times of privatization are over."

Croatia, seeking to be the next eastern European nation to join the EU, saw the share of equities held by foreign investors drop from 39 per cent to 32 per cent in the year through June, Austrian bank RZB Group said.

Slovakia's currency, the koruna, has weakened even though the nation is set to join the top-flight club of euro-using countries on January 1.

Highly leveraged Romania, although still an inviting low-wage place to build a factory, is exposed because its currency, the lei, trades freely and government spending is set to rise.

For now, Poland - eastern Europe's largest economy - and the Czech Republic look financially and economically strongest in the region, analysts say. Still, consumer lending is tighter, crucial exports to western Europe are set to weaken and companies are starting to idle workers.

Some analysts say fears of a perfect financial storm hitting eastern Europe are overblown. They point to big infrastructure projects, such as those for Poland's co-hosting of the Euro 2012 football championship. There is also the outlook of easing wage pressure as the region's economies slow.

Next year's slump will be "only a moderate bump in the overall path of economic convergence" with the old EU countries, RZB Group analysts forecast. (dpa)