Czech crown dips from 6-week highs after Aug trade

PRAGUE, Oct 6 (Reuters) - The Czech crown slid from six-week highs versus the euro in morning trade on Friday, as the August foreign trade deficit matched expectations and failed to inspire fresh buying.

The crown traded at 28.177 per euro <0#EURCZK=> by 0810 GMT, following a mild retreat from a high of 28.120 seen in late Thursday trade.

The foreign trade balance slipped to the biggest monthly deficit so far this year in August, showing a 2.1 billion crown ($94.68 million) shortfall, against the consensus market forecast of a 2.3 billion crown gap [ID:nL06159828].

The deficit narrowed by 2.4 billion crowns over a year ago, but the statistics bureau noted the August 2005 gap was inflated by a one-off import of Jas-Gripen fighter jets worth 5.9 billion crowns. Adjusted for this effect, the deficit deepened.

"This figure in itself should provide no significant impulse for a further crown firming, and it is also neutral for interest rates," said Jiri Skop, analyst at Komercni Banka in Prague.

Separately, minutes from the Sept. 27 central bank policy board meeting showed policymakers wanted higher interest rates last month to reflect their outlook for the economy's cycle further down the road. For full text, click on [ID:nL06840635].

Minutes said the board had re-assessed risks to the exchange rate outlook, saying they were now "more evenly" distributed on both upside and downside -- as opposite to previous months when the crown was seen working against inflation.

At the September meeting, the bank raised its main policy rate by a quarter of a percentage point to 2.50 percent last week to keep price pressures under wraps amid a revival in consumer spending and fiscal loosening in the booming economy.

Financial markets have bet on one more similar rate increase before the year-end.

----------------- MARKET SNAPSHOT AT 0810 GMT ----------------- Crown/euro <EURCZK=> last deals at 28.177 (unchanged)

Crown/dollar <CZK=> at 22.214 bid (-0.10 pct)

5-year yield due Oct 2010 <CZ5YT=RR> 3.58 pct bid (-10 bps) 10-year yield due Jan 2016 <CZ10YT=RR> 3.82 pct bid (-2 bps)

5-yr CZK/EUR mid yield spread <DE114147=> -3 bps (vs 4) 10-yr CZK/EUR mid yield spread <DE113529=> 13 bps (vs 14)

Current levels versus prior domestic close at 1500 GMT ---------------------------------------------------------------

((Reporting by Marek Petrus; prague.newsroom@reuters.com; Reuters Messaging: marek.petrus.reuters.com@reuters.net; +420 224 190 477))

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Keywords: MARKETS CZECH CROWN MORNING