Czech crown recovers from early dip

PRAGUE, Sept 20 (Reuters) - The Czech crown recovered from an early drop on Wednesday, crawling back above late Tuesday's levels as a key support level held ground.

The crown traded at 28.440 to the euro at 1457 GMT, up 0.05 percent on the day and up from the day's low at 28.510, as other regional currencies also gained ground.

"There still is strong interest to sell (euros) from here (28.500)," said CSOB senior trader Mirek Tutter.

But he forecast a range of 28.400-600 for the coming days, with continued pressure toward softer levels due to unrest in Hungary and unclear outlook for the Czech 2007 state budget amid a political stalemate.

Central bank board member Michaela Erbenova told daily Mlada fronta Dnes that state finances were not under control and there was time to start discussing a new euro adoption plan after the 2010 target fell through.

The crown has lost nearly 2 percent since hitting a life-time high of 27.955 per euro in early August, hurt by investor concerns about weakening export momentum and limited prospect of bold reforms to curb a burgeoning budget deficit.

But the central bank (CNB) has opened the door to a possible 25 basis point interest rate hike at its Sept. 27 session, which analysts said could help underpin the currency. The key Czech rate is a record 75 basis points below the euro zone benchmark.

The CNB last raised rates, by 25 basis points, in July to contain inflation in an economy growing at record 6 percent.

----------------- MARKET SNAPSHOT AT 1457 GMT ----------------- Crown/euro <EURCZK=> last deals at 28.440 (0.05 pct) Crown/dollar <CZK=> at 22.376 bid (0.21 pct)

5-year yield due Oct 2010 <CZ5YT=RR> 3.69 pct bid (4 bps) 10-year yield due Jan 2016 <CZ10YT=RR> 3.93 pct bid (5 bps)

5-yr CZK/EUR mid yield spread <DE114147=> -1 bps (vs -6) 10-yr CZK/EUR mid yield spread <DE113529=> 16 bps (vs 9)

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

((Reporting by Jan Lopatka, editing by David Christian-Edwards; prague.newsroom@reuters.com; Reuters Messaging: jan.lopatka.reuters.com@reuters.net; +420-224 190 474))

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Keywords: MARKETS CZECH CROWN CLOSE