The lira recouped some losses after last week's plunge, but worries over Turkey's economy remained and led to continued selling in emerging markets.

The euro also fell due to fears of contagion effects through euro zone companies exposed to Turkey, including Spanish, Italian and French banks.

Central European economies are regarded as emerging markets and they are tightly integrated with the euro zone.

Hungarian markets took the biggest hit on Monday, with the forint falling as much as one percent against the euro. At 0843 GMT it traded at 324.55, down 0.6 percent. The zloty and the Czech crown shed only 0.4 percent.

Budapest's main index shed one percent, with all blue chips falling.

Hungary has strong current account and trade surpluses, but its has the lowest benchmark interest rate in the region at 0.9 percent.

"The forint is the cheapest (in the region) to short ... Having low interest rates can have disadvantages, too," one Budapest-based currency dealer said.

The forint was knocked back to three-week lows despite some expectations that Standard & Poor's will upgrade Hungary's sovereign rating in a review due on Friday.

An upgrade is likely and a one-notch move to "BBB" from "BBB-" "would re-open positive re-rating story for Hungary and should provide a better floor to its financial markets in turbulent times," Raiffeisen analyst Gintaras Shlizhyus said in a note.

"On the other hand, overly loose monetary policy may be considered a challenge for Hungary, limiting its rating upside," the analyst said.

Risk aversion weakened the crown to a three-week low as well, even though the Czech central bank has raised its interest rates five times in the past 13 months, the last time on Aug. 2. Its main rate stands at 1.25 percent, the second-lowest in the region after Hungary.

Second-quarter economic output data due in several countries on Tuesday are expected to show growth continues, but that may not relieve regional markets from pressure caused by the global jitters, analysts said.

"Low debt supply in August could stabilise POLGBs (Polish government bonds), but the (upcoming) US data and EM sell-off could generate upside pressure on yields," BZ BWK analysts said in a note.

The yield on Poland's benchmark 10-year bond was bid higher by 6 basis points at 3.2 percent. Hungary's corresponding yield rose 13 basis points from Friday's fixing to 3.61 percent.