Czech crown firms as market awaits confidence vote

PRAGUE, Oct 3 (Reuters) - The Czech crown firmed along with other central European currencies on Tuesday, but investors kept a close eye on a parliamentary debate before a confidence vote that the minority rightist government looks set to lose.

The crown gained 0.2 percent to trade at 28.230 per euro <0#EURCZK=> by 1415 GMT, having hit a near one-month high of 28.181 early in the session.

Prime Minister Mirek Topolanek's cabinet is widely expected to be toppled in the confidence vote which will take place after debate that started earlier on Tuesday and could take hours, or even days, before deputies get to vote.

"During past month (Topolanek's government) has not built more support that it had before, and even with its previous coalition partners it does not have enough support," said Istvan Zsoldos, central European economist at Goldman Sachs in London.

"The likelihood of an eventual new election, maybe early next year, has been increasing," he added.

Analysts said the market had already discounted a high probability of the government not surviving the confidence vote, leaving little obstacle for the crown to make a slight advance.

The Czech currency also tracked Poland's zloty which rose half a percent on signs a two-week political crisis in the neighbouring country could end and elections be put off until at least next year.

The currency received additional support from news that Finland's paper maker Myllykoski Corp. plans to invest 450 million euros ($571.8 million) in the Czech Republic, calming some jitters over a drop in foreign direct investment this year.

Parliament has been deadlocked since a June 2-3 general election with leftist and centre-right parties each controlling 100 seats.

----------------- MARKET SNAPSHOT AT 1413 GMT ----------------- Crown/euro <EURCZK=> last deals at 28.240 (+0.13 pct) Crown/dollar <CZK=> at 22.172 bid (+0.06 pct)

5-year yield due Oct 2010 <CZ5YT=RR> 3.62 pct bid (-7 bps) 10-year yield due Jan 2016 <CZ10YT=RR> 3.87 pct bid (0 bps)

5-yr CZK/EUR mid yield spread <DE114147=> -3 bps (vs 7) 10-yr CZK/EUR mid yield spread <DE113529=> 14 bps (vs 18)

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; editing by David Christian-Edwards))

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Keywords: MARKETS CZECH CROWN CLOSE