UPDATE 1-Czechs to hike 2007 bond offer if no foreign bond

(Releads with figures on net issuance, adds market reaction)

PRAGUE, Dec 1 (Reuters) - The Czech Republic will increase local currency bond borrowing slightly next year if it relies solely on the domestic market and refrains from a foreign issue, the government's debt plan showed on Friday.

Net of redemptions of bonds falling due in 2007, the European Union member country's borrowing through medium- and long-term bonds could rise to up to 109.8 billion crowns from this year's expected 100.7 billion.

The government aimed to borrow 72.8-152.8 billion crowns ($3.44-$7.21 billion) through local currency government bond issues next year, including redemptions of 43 billion crowns worth of notes maturing during 2007.

The target compared to this year's expected gross issuance of 158.7 billion crowns and came in line with market expectations. Debt yields <0#CZBMK=> were mixed and little changed on the day after the news.

The issuance plan left the room to raise zero to 80 billion crown equivalent of foreign debt next year and the ministry said domestic borrowing would rise to the ceiling only if it refrains from tapping foreign markets.

The country opted out of tapping international debt markets this year after issuing 30 billion yen ($258.2 million) worth of 30-year bonds in mid-January.

The ministry said it would only refrain from returning to international markets next year if domestic market conditions are "exceptionally" favourable.

The Czech Republic, rated 'A-' by Standard & Poor's, raised 2.5 billion euros through Eurobond issues in 2004-2005.

In September, a ministry official said a Eurobond offering in 2007 was possible, market conditions permitting, to aid government debt financing at a time of a widening fiscal gap.

The ministry added it would offer 39 billion crowns worth of paper through six auctions in the first three months of this year, reopening the outstanding 3-year, 5-year, 10-year and 15-year benchmark notes. ((Reporting by Marek Petrus; Editing by Cheryl Juckes; Reuters Messaging: rm://marek.petrus.reuters.com@reuters.net; e-mail: prague.newsroom@reuters.com or marek.petrus@reuters.com; Tel: +420 224 190 477)) ($1=116.21 Yen) ($1=21.19 Czech Crown)

Keywords: CZECH BONDS/