UPDATE 1-Czech stocks hit record, driven by U.S., economy

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PRAGUE, April 4 (Reuters) - Gains on foreign markets, fast Czech economic growth and a government plan to cut corporate taxes drove the Prague stock exchange to record highs on Wednesday, though analysts warned a correction looms.

The main PX index hit 1,733.2 in the first minutes of trade, and was quoted as high as 1,736.6 points, up 0.7 percent from Tuesday. The previous all-time high of 1,726.3 was reached on Feb. 26.

The index has gained 13 percent over the past year amid strong economic growth.

Ceska Sporitelna analyst Radim Kramule said the latest positive data from the United States were behind the fresh rise.

"We believe there will be some further correction, but that the (Czech) bourse will end this year with a gain ... for fundamental reasons, and the proposed (tax) reforms may have a positive impact on Czech companies," he said.

The government announced a package of reforms on Tuesday aimed at cutting the budget deficit, including a gradual fall in the corporate tax rate to 19 percent in 2010 from 24 percent this year.

The centre-right coalition government, however, faces a tough battle to push the reforms through the lower house of parliament where it controls just 100 out of 200 seats.

The Czech economy grew by 6.1 percent last year, narrowing the gap behind the richer western European countries, and analysts forecast only a moderate slowdown this year.

Oil refiner Unipetrol was the biggest gainer on Wednesday morning, adding 1.1 percent to 241 crowns, followed by power firm CEZ which added one percent to 956.50.

Other exchanges in the region also gained ground, following a rise of more than 1 percent in the Dow Jones industrial average on Tuesday.

Kramule said his picks for this year were generic drugs maker Zentiva , real estate developer ECM and television group CME .