Czech crown flat, markets mull int.rate outlook

PRAGUE, Sept 18 (Reuters) - The Czech crown held broadly steady against the euro in early Monday trade, stabilising after last week's recovery from near two-month lows as investors weighed the chances of a possible interest rate hike next week.

The Czech currency traded at 28.475 per euro <0#EURCZK=> by 0905 GMT, little changed from Friday's domestic close.

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.

"The growing concerns about the fiscal outlook and accelerating inflationary pressure, coupled with a slowly deteriorating foreign trade performance, increase downside risks for the currency," bank BNP Paribas said in a morning note.

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.

Many investors started betting on a September rate rise after CNB Vice-Governor Miroslav Singer told Reuters in an interview last week that rising inflation pressure forced policymakers to "thoroughly" consider an imminent move.

A Reuters poll showed on Friday 15 out of 24 analysts forecast interest rates to hold steady this month despite Singer's comments. All but three analysts in the poll however expect at least one 25 basis point hike by the end of the year.

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 0903 GMT ----------------- Crown/euro <EURCZK=> last deals at 28.475 (+0.04 pct) Crown/dollar <CZK=> at 22.462 bid (-0.28 pct)

5-year yield due Oct 2010 <CZ5YT=RR> 3.69 pct bid (+4 bps) 10-year yield due Jan 2016 <CZ10YT=RR> 3.91 pct bid (+2 bps)

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

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

((Reporting by Marek Petrus; Editing by David Christian-Edwards; 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