Czech crown recovers, bucks region

PRAGUE, Sept 21 (Reuters) - The Czech crown recovered from an early dip to close flat on Thursday, defying weakness in other markets in the region.

The currency dipped toward a key support level at 28.500 to the euro <EURCZK=> in early trade but later firmed to as high as 28.385.

It last traded at 28.44 at 1440 GMT, flat from late Wednesday, while other regional currencies dipped on a row in the Polish ruling coalition which took over from Hungarian street protests as the main investors' worry in the region.

"I think people were long (euro). When another attempt to break the 28.500 level failed, I think some people gave up," said one Prague trader.

Exporters hedging their future foreign currency income on crown dips have propped up the crown in recent sessions.

The trader predicted a range of 28.350-550 in the coming days.

The central bank's board held a regular weekly meeting, but had no monetary policy issues on agenda.

The board is due to discuss interest rates on Sept. 27, and some analysts expect it to tighten policy by 25 basis points. Most in the market however still expect the bank to hold off a until at least October.

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

The crown has lost nearly 2 percent since hitting a life-time high of 27.955 per euro in early August.

The main drag on the crown has been weaker export momentum and a worsening of the fiscal outlook amid a political stalemate which has hampered policy making and made prospects for the 2007 budget unclear.

The government is due to discuss the central government budget, the main part of the public sector finances, on Monday. ----------------- MARKET SNAPSHOT AT 1442 GMT ----------------- Crown/euro <EURCZK=> last deals at 28.434 (0.02 pct) Crown/dollar <CZK=> at 22.337 bid (0.14 pct)

5-year yield due Oct 2010 <CZ5YT=RR> 3.68 pct bid (-1 bps) 10-year yield due Jan 2016 <CZ10YT=RR> 3.87 pct bid (-6 bps)

5-yr CZK/EUR mid yield spread <DE114147=> -1 bps (vs -1) 10-yr CZK/EUR mid yield spread <DE113529=> 11 bps (vs 16)

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

((Reporting by Jan Lopatka, editing by ; 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