UPDATE 1-CEZ falls after news of possible stake flotation

(Adds analyst quote, background, updates share price)

PRAGUE, Sept 18 (Reuters) - Shares in Czech power utility CEZ <CEZPsp.PR> fell shortly after opening on Monday following news of a possible flotation of the state's 16 percent stake on the Prague Stock Exchange next year.

The stock opened as much as 2 percent lower before regaining ground. It traded down 1.4 percent at 806 crowns by 0755 GMT.

Finance Minister Vlastimil Tlusty said on Sunday the minority right-of-centre Czech government would consider floating the 16 percent stake in small chunks, so as not to affect the company's share price.

The Czech Republic owns 68 percent of CEZ, one of the biggest companies in central Europe by market capitalisation. A 16 percent stake is worth about $3.5 billion at the current stock price.

"The story has been on and off many times in the past few years, however this time it seems more serious than ever," said Tibor Bokor, analyst at Wood & Company.

"It could be premature to react on the news, though the risk is clearly on the downside," he said, adding it would take months to prepare a share offering and the fate of the minority government was up in the air.

The government of rightist Civic Democratic Prime Minister Mirek Topolanek lacks a parliamentary majority and is likely to lose a confidence vote planned for Oct. 4.

Tough political talks are expected to follow the confidence vote, given no agreement on government so far since a June election which gave both left and right-wing factions exactly the same power in parliament. ((Reporting by Marek Petrus; editing by Paul Bolding; 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))

Keywords: UTILITIES CZECH CEZ