UPDATE 1-Slovak party says coalition agrees on govt, budget

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Slovak ruling coalition parties agreed to keep their government and support the 2008 budget draft despite rifts that have threatened to break up the cabinet, HZDS party chief Vladimir Meciar said on Thursday.

The centrist HZDS, or Movement for a Democratic Slovakia, and Fico's leftist Smer have clashed over controversial land deals at an agency supervised by HZDS, destabilising the government at a crucial time in Slovakia's efforts to enter the euro currency zone in 2009.

But Meciar said party leaders had met late on Wednesday and ironed out some of their differences.

"All parties have expressed interest in approving the budget," Meciar told a news conference.

"There is no reason not to have a majority in the vote," he said, adding the plan to adopt the euro was one of the main reasons for all the three government parties to stick together.

Meciar added Fico had told him he would tie the budget vote, expected by Friday, with a vote of confidence in the cabinet.

The coalition appeared on the brink of collapse on Wednesday when Meciar said Fico had told him he did not want to continue the coalition.

Fico did not confirm Meciar's statement on Wednesday and refused to say if the coalition would continue in its current form.

The Slovak crown currency firmed in early Thursday trade, standing at 33.29 to the euro , from 33.375 late on Wednesday. (Reporting by Peter Laca, writing by Jan Lopatka)

Keywords: SLOVAKIA COALITION/

[BRATISLAVA/Reuters/Finance.cz]