UPDATE 1-Czech talks on broad coalition govt collapse

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PRAGUE, Dec 13 (Reuters) - Talks on forming a broad coalition government in the Czech Republic collapsed on Wednesday after Prime Minister Mirek Topolanek's rightist Civic Democratic Party ended negotiations with his leftist rivals.

The Czechs have been without a stable government for over six months after centre-right and leftist parties each won 100 seats in the 200-seat lower house in a June general election.

Topolanek and his party had been leading talks with the leftist Social Democratic Party and centrist Christian Democrats to form a government and end the crisis, but differences over policy issues such as taxes and the makeup of the government were too great to overcome.

"The executive council decided, under these conditions, not to continue in the negotiations on government with the Social Democrats," Topolanek told a news conference.

Deputy party chief Pavel Bem said the Civic Democrats will try to renew talks on forming a three-party centre-right cabinet with the Christian Democrats and the Green Party.

Such a government may rely upon at least one Social Democrat deputy crossing the floor and supporting the government.

Other party officials said they may try form a minority cabinet with the Christian Democrats which would be supported by the left.

Czechs are increasingly upset over the crisis, blaming politicians from all parties for failing to put aside their differences to create a government that will deal with important reforms such as pensions and healthcare.

However, the economy has continued to roll along with strong growth, easing unemployment and inflation below the central bank's target range.

Earlier on Wednesday parliament approved the 2007 state budget as parliamentary deputies from both sides of the floor voted for the legislation.

((Reporting by Jan Lopatka and Jan Korselt, Writing by Alan Crosby; editing by Fredrik Dahl; prague.newsroom@reuters.com; Reuters Messaging: jan.lopatka.reuters.com@reuters.net; +420-224 190 474))

Keywords: CZECH POLITICS/