Czech crown steady, eyes politics, c.bank meeting

PRAGUE, Oct 23 (Reuters) - The Czech crown held flat against the euro on Monday morning, as the market weighed the chances of key parties resolving a five-month-old parliamentary stalemate after the weekend Senate and local elections.

The crown traded at 28.315 per euro <0#EURCZK=> by 0845 GMT. Miroslav Tutter, senior currency dealer at CSOB bank, said the crown's moves would likely stay contained within a range of between 28.250 and 28.400 per euro in the short-term.

The right-wing Civic Democrats dominated the first round of voting for the upper house Senate as well as local elections, boosting outgoing Prime Minister Mirek Topolanek and his calls for an early vote for a new lower house of parliament [nL22730163].

But many analysts sounded sceptical on the likelihood of any significant breakthrough in political negotiations before the second round of Senate elections at the end of this week.

"Negotiations on the political arrangement will continue to be difficult and new impulses are to be expected only after the second round of the Senate elections," said Pavel Sobisek, chief economist at HVB Bank in Prague.

The market is also waiting for Thursday's meeting of central bank (CNB) policymakers which may offer indications to the near-term policy outlook. Only two of 24 economists in a Reuters poll predicted a 25 basis point interest rate increase this week.

The rest saw the main policy rate remaining at 2.50 percent, the lowest level in the EU along with Sweden, after 25 basis point increases in July and September aimed at keeping inflation at bay as household demand steps up a gear. For a news report, double click on [ID:nL20451838].

The outlook for near-term interest rate stability, along with jitters over the deteriorating budget outlook and the political crisis, has dampened investor interest in buying into crown-denominated assets.

The Czech currency has underperformed central European peers so far this month, sliding 0.1 percent versus the euro while the Slovak crown, Polish zloty and Hungarian forint have gained some 2.3 percent, 2.7 percent, and 3.7 percent, respectively.

----------------- MARKET SNAPSHOT AT 0844 GMT ----------------- Crown/euro <EURCZK=> last deals at 28.320 (+0.07 pct) Crown/dollar <CZK=> at 22.495 bid (-0.02 pct)

5-year yield due Oct 2010 <CZ5YT=RR> 3.63 pct bid (+4 bps) 10-year yield due Jan 2016 <CZ10YT=RR> 3.84 pct bid (+2 bps)

5-yr CZK/EUR mid yield spread <DE114147=> -16 bps (vs -17) 10-yr CZK/EUR mid yield spread <DE113529=> -2 bps (vs -1)

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

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

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Keywords: MARKETS CZECH CROWN MORNING