VIENNA -- Eastern Europe's out-of-favor stock markets are looking fundamentally cheap after sustained falls dating back to earlier this year, but the international climate may not yet be right for a rebound, analysts say.


The emerging markets of Warsaw, Prague and Budapest are now "on the attractive side of fair value," said Glen Wellman, a fund manager at Credit Suisse First Boston in London.


But international market jitters over stocks, bonds and the dollar, as well as a steady stream of new issues coming onto the budding markets may still leave some room for further falls. That is why Wellman is still taking a relaxed approach to investing the $200 million he controls in the Central European Growth Fund launched in February.


"Although we've been buyers and as the markets have come back in the last couple of weeks, we've become increasingly aggressive buyers, the markets are not yet at a level where we would expect to be fully invested," said Wellman.


Erich Koutny, who manages Creditantalt-Bankverein's 360 million schilling ($32 million) Ost Aktiv fund, said investors may have to wait until autumn for global markets to calm enough to enable eastern Europe to rally.


"The big downward pressure is over. The stabilization phase is beginning, but if you look at the environment and the nervousness in bond and stock markets, you see that sentiment doesn't leave room for any euphoria," Koutny said.


Koutny has upped the weight of Poland in his portfolio to just under 20 percent, citing a price-earnings ratio of just over 10 and forecast profits growth of 70 percent this year.


The Czech Republic and Hungary, both on p/e ratios around 14 or more, are weighted at 30 percent each in Ost Aktiv, with 1994 profits growth seen around 20 percent in both countries.


Eastern Europe's most lively market, the Warsaw stock exchange, hit a new low for the year at the end of last week, with the all-share WIG index touching 7,215 points, down 65 percent from March 8's all-time high of 20,760 points.


That is low enough to encourage some bargain-hunting, and CSFB's Wellman said his fund started buying Polish stocks for the first time last week "without being super aggressive."


Analysts say good corporate earnings and attractive prices may not be enough to mobilize capital, now drained by the steady inflow of new issues, which is likely to boost the number of listed stocks to more than 40 from the current 24.


Prague has rallied on low volume in the last two weeks. The HN-Wood 30 index, which peaked at 3,805 on February 1, hit bottom on June 7 at 1,836 before recovering to end last week at 2,145, down 4.5 percent since the start of the year.


"I expect that the price increase is only temporary since volumes are still so low -- I don't believe we are seeing a true market rebound," said Tomas Korinek, an equities analyst at the Prague office of Girocredit.


A recovery in prices in Prague is also being slowed by the second wave of the government's voucher privatization scheme, with domestic funds concentrating on researching second wave companies, said John Vax, the capital markets director at ING Bank.


"I think activity will remain slow until the end of the summer when the second wave of privatization comes to an end. Then I expect the market, boosted by increased trading by domestic institutions, to pick up," Vax said.


Meanwhile, Hungary appears to be stabilizing near the lows, with foreign and domestic investors preferring to snap up attractively priced new issues that trade on the often illiquid secondary market, where turnover has shrunk to year-lows. Budapest's BSE index peaked February 2 at 2,189.94, up 78 percent from the end of 1993, but ended last week at 1,452.


Analysts were upbeat on the coalition deal struck by the Socialists with the liberal Free Democrats, and said Gyula Horn's government should break a policy logjam. "Hungary has the momentum in the right direction both politically and economically," said Nick Wergen at Smith New Court in London. "The coalition is the best of all worlds -- you now have a stable, broad-based government that can start putting into place consistent economic policy."


Wellman also said he had his eye on a handful of Slovak companies, and said he would look to invest in the Slovenian market once authorities there make it easier for foreign investors to build portfolio positions.


And both politics and economics look to be turning out better than expected across the region, Wellman said. "The fundamentals in terms of growth rates and inflation rates, and indeed politics after the Hungarian election, are coming in at least as well as expected and if anything our expectations are being ratcheted upwards."


"And in terms of underlying economic growth there's no question that this region will be the fastest-growing part of Europe this year," he said.