The European Union's emerging east is counting on rising export demand from economic powerhouse Germany and other trade partners within the bloc to help boost growth this year after a sharp slowdown caused much of the region to contract in 2013.

The recovery started 2014 on solid ground.

In Poland, central Europe's biggest economy, which expanded at its slowest pace since 2009 last year, the HSBC manufacturing purchasing managers' index (PMI) rose to 55.4, higher than expected, and showed firms took on staff at a record clip.

The Czech PMI hit a 2-1/2 year high of 55.9 and was above the breakeven 50 mark that divides expansion from contraction for the ninth month in a row.

Hungary's PMI, which is compiled using a different methodology, surged to 57.9, well above its average of the past three years.

The PMI readings in central Europe mirrored German data out on Monday and will be good news for central banks that have reduced borrowing costs to new lows in the past two years.

"Manufacturing PMIs ... (suggest) further acceleration in industrial output in early 2014. This coincides well with ongoing strength in Germany," BNP Paribas analyst Michal Dybula said. "Weaker central European currencies will additionally support foreign sales from Poland, Hungary and the Czech Republic in the months to come."

A big sell-off emerging markets at the start of this year has weakened currencies, which could boost demand for emerging Europe's cars, electronics and other exported goods.

However, a further rout could prompt Hungary to raise rates to protect the forint, which is creeping towards record lows - something Turkey's central bank was forced to do last week.

GERMAN CONNECTION

Many companies in central Europe with strong links to German industry have already seen orders rise.

German carmaker Audi (>> Volkswagen AG) sees production rising this year at the 900 million euro car plant it opened in Hungary in 2013, a spokesman said.

ArcelorMittal's Czech unit has also registered a pickup in volumes since the end of last year, but Jan Rafaj, a member of the steelmaker's board, said margins still had room to grow, showing some of the challenges to recovery.

"Volumes are quite good in most segments but what we still are missing is that margins do not go hand in hand with that," he said.

As the Czech economy pulls out of its longest recession, the central bank - which cut interest rates to near zero in 2012 - has pledged to keep the crown on the weak side of around 27 to the euro to fight deflation threats and aid recovery.

A fall in the crown of more than 6 percent since the central bank intervened to weaken it in November should also help to boost exports over time, said Radomir Jac, chief analyst at Generali PPF Asset Management.

"The improvement in export orders is at this point probably more reflecting improvement in the manufacturing activity in other European countries," he said.

In Poland, analysts said new orders data also showed demand from domestic consumers strengthening along with higher exports.

Analysts expect Polish interest rates to stay at 2.50 percent until the fourth quarter, when a pickup in growth and inflation should prompt the central bank to start hiking rates.

Hungary still aims to cut borrowing costs further from current historic lows although a drop of around 5 percent in the forint in early 2014 is becoming a risk to those plans.

"The recent emerging markets turmoil did not bypass central Europe despite the fact that fundamentals of regional economies often show a brighter picture than their peers," KBC said.

(Additional by Krisztina Than in BUDAPEST, Jakub Iglewski and Michal Janusz in WARSAW, and Robert Muller in PRAGUE; Editing by Catherine Evans)

By Jason Hovet