UPDATE 1-CEZ mulls buyback of 10 pct of shares -paper

(adds quote, analyst, background, share price)

PRAGUE, Sept 29 (Reuters) - State-controlled Czech power producer CEZ <CEZPsp.PR> is considering a plan to buy back as much as 10 percent of its stock from the open market, the daily Hospdarske Noviny reported on Friday.

The paper quoted CEZ supervisory board member Tomas Huner as saying the option was seriously being considered, and could be decided upon within a month.

"That's my personal estimate (on when a decision could be made)," he was quoted as saying.

Ten percent of CEZ, Europe's second-largest energy exporter, would be worth around 46 billion crowns ($2.06 billion). CEZ shares closed at 781 crowns on Wednesday. The market was closed on Thursday for a national holiday.

A CEZ spokeswoman confirmed the report.

The announcement of the plan follows a government decision earlier this week to sell around 7 percent of CEZ on markets to help fill a gap in the 2007 state budget.

The state holds 67.61 percent of CEZ, east Europe's largest firm by market capitalisation.

Analysts said the plan would help support CEZ's share price.

"A buyback before the privatisation of a 7 percent stake could drive up the stock price," said Atlantik FT in a note to investors.

The state's sale of a part of CEZ is not assured, however.

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

Tough political talks are expected to follow the confidence vote, given no agreement on a government so far since a June election which gave both left and right-wing factions exactly the same power in parliament.

Leftists have said they are against the CEZ share sale. ((Reporting by Alan Crosby, editing by Erica Billingham ; prague.newsroom@reuters.com; Reuters Messaging: alan.crosby.reuters.com@reuters.net; +420 224 190 477)) ($1=22.32 Czech Crown)

Keywords: UTILITIES CZECH CEZ