Czech crown dips after rebound from 8-month lows

PRAGUE, Sept 15 (Reuters) - The Czech crown slid in morning trade on Friday after recovering from near eight-week lows against the euro in the previous session, in part on expectations of an interest rate rise as early as this month.

The crown traded 0.2 percent weaker on the session at 28.490 per euro <0#EURCZK=> by 0755 GMT, following a rebound from Thursday's low of 28.565 on renewed buying from London banks and also local exporters hedging their foreign currency receipts.

The currency, under selling pressure in past days on concerns over a budget deficit and a delay in euro adoption beyond 2010, drew support from hawkish statements by central bank Vice-Governor Miroslav Singer in a Reuters interview.

Singer said mounting inflation pressure in the Czech economy would force central bank policymakers to "deeply and thoroughly" consider an interest rate rise later this month, opening the door to a possible 25 basis point hike at the Sept. 27 session.

"The Thursday's move lower in the euro/crown was very sharp and fast, but London came on the bid (buying euros and selling crowns) in the evening in good sizes," said Miroslav Tutter, senior currency dealer at CSOB bank.

"For Friday, I would rather expect a range trading between 28.400 and 28.550," he added.

The crown has retreated from a life-time high of 28.955 per euro hit in early August, hurt by investor concerns about weakening export momentum and limited prospect of bold reforms to curb a burgeoning budget deficit.

The Czech economy slowed in the second quarter from a record-breaking pace while still advancing at a strong 6.2 percent annual rate, but contribution of exports has declined and growth increasingly stemmed from domestic consumption.

Resurgent inflation and reviving consumer spending have raised expectations of a near-term monetary tightening, hurting prices of fixed-income debt. Yields on long-dated benchmark bonds <0#CZBMK=> have hit their highest levels in about a month.

----------------- MARKET SNAPSHOT AT 0754 GMT ----------------- Crown/euro <EURCZK=> last deals at 28.490 (-0.21 pct) Crown/dollar <CZK=> at 22.399 bid (-0.42 pct)

5-year yield due Oct 2010 <CZ5YT=RR> 3.66 pct bid (flat) 10-year yield due Jan 2016 <CZ10YT=RR> 3.90 pct bid (unch)

5-yr CZK/EUR mid yield spread <DE114147=> -7 bps (vs -4) 10-yr CZK/EUR mid yield spread <DE113529=> 9 bps (vs 11)

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

((Reporting by Marek Petrus; Editing by xxx xxx; 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))

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Keywords: MARKETS CZECH CROWN MORNING