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UPDATE 2-Hungary votes, expected to grant third term to nationalist PM Orban

(Adds Jobbik leader's comments after casting vote, turnout)

* Orban has campaigned on anti-immigrant message

* Ruling Fidesz leads all polls but tactical voting a threat

* Financial markets have priced in Orban's victory

* Polls close at 1700 GMT

* Voter turnout record high at 0700 GMT

BUDAPEST/GYONGYOS, Hungary, April 8 (Reuters) - Hungary's Viktor Orban, a hardliner on immigration in Europe, pledged to fight for his country after casting his vote on Sunday in an election that is expected to give him a third straight term in office.

After an acrimonious campaign in which Orban projected himself as a saviour of Hungary's Christian culture against Muslim migration into Europe, all opinion polls put his Fidesz party well ahead.

A strong victory could embolden him to put more muscle into a Central European alliance against the European Union's migration policies. Orban, Hungary's longest-serving post-communist premier, opposes deeper integration of the bloc.

He has far-right admirers across Europe who like his tough line on migrants, while critics say he has put Hungary on an increasingly authoritarian path.

A landslide win would make Orban feel vindicated in his decision to run a single-issue campaign, arguing migration poses a security threat. His critics said his stance has fuelled xenophobia.

After casting his vote in a wealthy district of Budapest, Orban said: "From here I will go and take part in mobilising voters ... I am asking everyone to take part in the election."

Asked by journalists if he was fighting the European Union, Orban said: "The EU is not in Brussels. The EU is in Berlin, in Budapest, in Prague and in Bucharest."

He reiterated he would stand up for Hungary's interests and said Hungary was a loyal member of international organisations.

"We love our country and we are fighting for our country."

A strong win for Orban would also boost other right-wing nationalists in Central Europe, in Poland and in neighbouring Austria, and expose cracks in the 28-nation EU.

While Fidesz led all opinion polls before the vote, there is a small chance that the fragmented opposition could strip Fidesz of its parliament majority if voters frustrated with Orban's policies choose tactical voting in the 106 constituencies.

The strongest opposition party is former far-right Jobbik, which has recast its image as a more moderate nationalist force. It has been campaigning on an anti-corruption agenda and urged higher wages to lure back hundreds of thousands of Hungarians who had left Hungary to earn a better living in western Europe.

Clad in a green summer jacket and white shirt, Jobbik leader Gabor Vona, 39, arrived to vote in the eastern Hungarian city of Gyongyos, his home town and the district where he is likely to win a seat.

"Everyone should go to vote because this election determines Hungary's course not for four years but for two generations at least," he told reporters. "Emigration may or may not define Hungary, and I would prefer that it does not."

He said voter turnout would determine the outcome. Analysts say a high turnout favours the opposition, especially Jobbik.

At 0700 GMT, turnout was 13.17 percent, a new record in Hungary's post-communist elections.

MIGRATION LIKE "RUST"

The EU has struggled to respond as Orban's government has used its two landslide victories in 2010 and 2014 to erode democratic checks and balances, by curbing the powers of the constitutional court, controlling the media and appointing loyalists to key positions.

Orban is credited with keeping the budget deficit under control, reducing unemployment and some of Hungary's debt, and putting its economy on a growth track.

On Friday, at his closing campaign rally, Orban vowed to protect his nation from Muslim migrants, saying: "Migration is like rust that slowly but surely would consume Hungary."

The anti-immigrant campaign has gone down well with around two million core voters of Fidesz.

"My little daughter must be my primary concern, to make her future safe. Safety is first," said Julia Scharle, 27, holding her child outside the voting district where Orban cast his vote. She would not reveal her voting preference.

In March the government gave pre-election handouts to millions of families and pensioners.

ODD CHANCE OF SURPRISE

A poll by Zavech research institute published on Friday showed Fidesz had 46 percent support among decided voters, while Jobbik had 19 percent. The Socialists came in third with 14 percent. Voter turnout was estimated between 64 and 68 percent.

However, one-third of voters are undecided and many hide their voting preference.

In 2014, Fidesz won a two-thirds majority in the 199-seat parliament with 133 seats. That looks less likely now.

If Orban wins, he is expected to carry on his economic policies, with income tax cuts and incentives to boost growth.

His business allies are expected to expand their economic domains. Businessmen close to Fidesz have acquired stakes in major industries like banking, energy, construction and tourism, profiting from EU funds.

"Only a dramatic outcome of the election would force a significant shift in the direction of policymaking," Barclays said in a note.

It said pragmatism was likely to prevail given the importance of EU structural funds for Hungary which would probably avoid an all-out conflict with the EU.

(Writing by Krisztina Than, additional reporting by Sandor Peto; Editing by Janet Lawrence)