Vienna  - Central European shares rose Monday, paced by financial companies, after the US government seized control of two troubled lenders that underpin the country's home loan market.

The Warsaw stock exchange's WIG20 blue-chip index was up 2.65 per cent to 2,569.62 points at mid-day. Benchmark indices in the Czech Republic and the Baltic nations also gained.

"The chief reason is the US government's bailout of Fannie Mae and Freddie Mac," said Roman Kodera, chief broker at Patria Online in Prague. "Investors in the banking sector see it as positive information."

Banks fuelled the rally on the Warsaw exchange, Central Europe's largest. Shares of BRE Bank, majority-owned by Germany's Commerzbank, added nearly 6 per cent. Bank Zachodni WBK rose nearly 5 per cent.

In Czech Republic, Prague's benchmark PX gauge was up nearly 3.6 per cent to 1,423.5. Luxembourg-based developer Orco Property Group rose the most among the 14 top stocks on the exchange, followed by Austrian bank Erste Group.

Economists say lenders in Central and Eastern Europe have little direct exposure to the US mortgage crisis that began in August 2007.

But the credit crunch's ripple effects and a slowing global economy have hit local stock markets.

Warsaw's WIG20 was down 27.6 per cent year-to-date on Friday, while Prague's PX ended the day at its lowest since July 2006 and down 21.3 per cent year-on-year.

On Monday, the OMX Baltic Benchmark GI was 1.3 per cent, but analyst Kestukis Celiesius said he didn't expect the US bailout to give the three Baltic nations a big boost.

Baltic markets are more concerned about the state of the local economies, which are facing recession after a credit-fuelled robust economic growth.

Most international investors have pulled their funds out of the Baltic market about a year ago, he said.

"What's happening on world markets won't influence our markets," said Celiesius, head of brokerage unit at Danske Bank in Lithuania. (dpa)