Czech crown falls to 2-wk lows, seen on back foot

PRAGUE, Oct 16 (Reuters) - The Czech crown fell to 2-week lows versus the euro on Monday, joining the weakening trend seen across central Europe and leading some analysts to predict a further mild drop through the end of the week.

The crown shed 0.2 percent on the day to trade at 28.340 per euro <0#EURCZK=> by 1407 GMT.

"Other central European currencies are quite overbought and most of the region may go through a negative correction. This should be supported by a further rise in global yields and gains on the dollar <EUR=>," said Jan Bures, analyst at CSOB bank.

But, he added in a research note, the crown's drop could be capped at levels around 28.380-400 per euro.

Viktor Kotlan, chief economist at Ceska Sporitelna, said in a note technical charts signalled the crown would test weaker levels in the short-term and possibly approach levels close to 28.500 to the euro.

A record, 75 basis point discount of Czech policy rates to the euro zone benchmark and a four-month-old political crisis has dampened investor appetite for Czech assets, but the robust economy and strong exports have held the crown's drop in check.

----------------- MARKET SNAPSHOT AT 1407 GMT ----------------- Crown/euro <EURCZK=> last deals at 28.340 (-0.19 pct) Crown/dollar <CZK=> at 22.619 bid (-0.26 pct)

5-year yield due Oct 2010 <CZ5YT=RR> 3.67 pct bid (-1 bps) 10-year yield due Jan 2016 <CZ10YT=RR> 3.90 pct bid (1 bps)

5-yr CZK/EUR mid yield spread <DE114147=> -8 bps (vs -7) 10-yr CZK/EUR mid yield spread <DE113529=> 7 bps (vs 7)

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

((Reporting by Marek Petrus; prague.newsroom@reuters.com; Reuters Messaging: marek.petrus.reuters.com@reuters.net; +420 224 190 477))

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Keywords: MARKETS CZECH CROWN CLOSE