UPDATE 1-Slovak PM says gas firm sees price cut in 2007

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BRATISLAVA, Oct 31 (Reuters) - Slovakia's dominant natural gas distributor has proposed cutting its prices to households in 2007, Prime Minister Robert Fico said on Tuesday.

Such a cut would help Slovakia to curb inflation, the main obstacle to its plans to adopt the euro currency in 2009.

Fico said distribution and transportation company SPP had proposed cutting prices for households by an average 3.07 percent next year.

"After years of improper increases in gas prices, this is the first step leading to stabilisation of the price," Fico told a news conference after a regular government meeting.

High global energy prices have helped to fuel Slovakia's consumer price inflation, which was running at 4.5 percent in September, but benchmark oil prices have fallen around 25 percent since mid-July.

Fico's leftist government, which won power from a centre-right coalition in a June election, has promised to protect the poor against rising energy costs and has stepped up pressure on utilities in recent months.

SPP, run by a consortium of Gaz De France <GAZ.PA> and Germany's E.ON Ruhrgas <EONG.DE> through a 49 percent stake and management rights, was allowed to raise prices for households by 4.3 percent as of November, much less than its original request for a 15 percent increase. The state holds 51 percent in SPP.

The central bank (NBS) sees inflation averaging around 2.5 percent in spring 2008, when Slovakia will be assessed on whether it can adopt the euro in 2009. The inflation ceiling for euro entrants is currently 2.8 percent.

The NBS has raised the main two-week repo rate by 175 basis points this year to fend off inflation risks from energy costs and fast economic growth, and analysts expect another 25 basis point hike at a monthly monetary meeting later on Tuesday.

((Reporting by Peter Laca, editing by Ruth Pitchford; Reuters Messaging: peter.laca.reuters.com@reuters.net; +40 21 315 8320))

Keywords: UTILITIES SLOVAKIA GAS