* Irish vote, Greek elections seen investor-positive
* Lower risk of paralysis blocking policy-making
* Irish government still faces hurdles in months to come
* Latvia budget worries remain wider threat to Europe
By Peter Apps, Political Risk Correspondent
LONDON, Oct 5 (Reuters) - They may still be the euro zone's weakest links, but Greece's solid opposition election win and Ireland's resounding Lisbon Treaty "yes" vote should both reduce the risks to the rest of Europe.
But on the European Union's eastern border, Latvian domestic politics and the difficulty in passing budget cuts could represent a wider threat.
Greece's Socialists won a greater than expected landslide election victory on Sunday, giving them a comfortable majority to push forward an economic programme based on economic stimulus and tax rises for the rich.
On Saturday Irish voters overwhelmingly endorsed the EU's Lisbon reform treaty, a major hurdle for Prime Minister Brian Cowen whose government would likely have fallen immediately had the treaty been rejected for a second time.
The two countries have been the hardest hit in the euro zone by the global financial crisis, prompting some to fear they could drag down the wider bloc particularly if domestic political stalemates stymied policy-making.
"In Greece, the election results mean we will have a stronger government than its predecessor," said IHS Global Insight Europe analyst Grace Annan. "In Ireland, the Lisbon treaty vote probably reduces the prospect of snap elections for now at least."
Either an inconclusive result in Greece or coalition failure in Ireland would have raised the spectre of a policy hiatus that could have left the countries too politically paralysed to tackle their economic problems.
That could have left Europe's stronger economies, primarily Germany, footing the bill.
The euro drew marginal support from the Lisbon vote, but foreign exchange traders were much more focused on a weekend G7 meeting that reaffirmed the market's view policymakers were comfortable with a gradually weakening dollar.
Greek stocks rose outperformed other European exchanges and bond yields tightened relative to German debt on Monday, with investors cheered by the thought of a government with a firm mandate.
"The surprise of a strong majority is what is driving the market higher today," said Alpha Finance analyst Manousos Stathoudakis in Athens. "Longer term, this could help public finances and the stock market."
LATVIA WORRIES REMAIN
Ratings agency Standard and Poor's said policy choices by the new government could affect Greece's sovereign rating in either direction, warning that further budgetary slippage could be negative but a "clear, credible and sustainable agenda to reinvigorate reforms" could eventually benefit the rating.
Irish bond yields also narrowed in relation to German debt following the Lisbon vote, while the cost of protecting Irish government debt in the credit default swaps market also fell.
Some had suggested rejection of the treaty by Ireland might reduce the enthusiasm of other EU members to bail out the country if it got into deeper trouble -- almost certainly a factor in the significant swing towards a "yes".
But Cowen's government remains far from out of danger despite the vote, facing a series of challenges in the coming months that could still destroy it and prompt elections.
Junior coalition partner the Greens will vote on Oct. 10 on whether to continue to support the government and a controversial 54 billion euro "bad bank" scheme, although analysts expect them to back both motions.
But an upset remains possible, and attempting to pass the third austerity budget in little more than 12 months in December could again strain the coalition to its limits and prompt new elections.
Any poll would likely bring to power a coalition government led by the centre-right Fine Gael and the left wing Labour parties, both committed to squeeze Ireland's budget deficit but potentially struggling to agree on cuts, with Labour against reducing public sector pay.
But for now, the greatest risk of a wider economic crisis in Europe comes from Latvia's domestic politics, with a fragile coalition unable or unwilling to push through the full budget cuts demanded by the EU and IMF as part of a 7.5 billion euro rescue package.
Swedish finance minister Anders Borg warned on Saturday international patience with the Baltic state was limited, saying it must deliver on its commitment to slash 2010 spending by 500 million lats. Sweden holds the rotating presidency of the EU.
Worries that delays in the loan programme could prompt a failure of the lat currency peg helped undermine the Swedish crown and shares in Swedish banks with heavy Baltic exposure on Monday.
Analysts have long worried that a Latvian devaluation could prompt a wider regional crisis just as markets recover from last year's crash, possibly dragging Western European economies into another round of expensive bailouts. (Editing by Dominic Evans)