UPDATE 2-Hungary drafts bill to protect fund savings

(Adds Raiffeisen comments on real estate fund)

By Krisztina Than and Gergely Szakacs

BUDAPEST, Nov 10 (Reuters) - Hungary's finance ministry unveiled legislation on Monday aimed at protecting savings in open-ended investment funds as part of measures to help ensure outflow-hit real estate funds have sufficient liquidity.

The measures follow a wave of capital withdrawals in the past weeks from the funds as households channelled savings into bank deposits which they regarded as safer amid the global financial crisis, and which pay high interest rates.

This resulted in an over 110 billion-forint outflow ($540.4 million) from the real estate funds, reducing their liquid assets in the process.

The draft legislation, submitted to parliament, follows Friday's decision by the financial market watchdog PSZAF to suspend trading in the notes of all Hungarian real estate funds for a period of 10 days.

PSZAF said the suspension would allow funds to inform their investors about the value and risks of investment in real estate funds following the acceleration of capital withdrawals in October.

PSZAF officials said on Monday the sector was not in need of a rescue package.

"If you like, this (suspension) was a proactive measure," PSZAF chairman Istvan Farkas told a news conference, adding that it was not liquidity problems which triggered the suspension.