(Repeats story published late on Tuesday)
* Czech court halts decree on Oct 9-10 election
* President Klaus says decision surely delays polls
* Court says not possible to set date until final ruling
By Jan Lopatka and Jan Korselt
PRAGUE, Sept 1 (Reuters) - A Constitutional Court ruling
threatened the Czech Republic's October parliamentary election
on Tuesday, causing political confusion as the country struggles
with the economic crisis and a ballooning budget gap.
The Czechs clawed their way out of a deep recession in the
second quarter and were heading into the Oct. 9-10 vote with
markets hoping for action on the spiralling public deficit,
which politicians said could lead to a Hungary-style meltdown.
President Vaclav Klaus said the court's ruling had surely
delayed the election and led to a political and constitutional
crisis, which he would try to resolve as soon as possible.
"I am deeply concerned by today's Constitutional Court
decision... which in fact means a postponement of the lower
house election indefinitely," Klaus said in a statement.
The court decided to freeze a presidential decree calling
the election, pending further deliberations on a complaint by a
member of the outgoing parliament.
The ruling follows a number of political crises that have
struck the 10-million EU member country in recent years when
tight elections produced weak governments. The instability had
culminated in March when a centre-right cabinet collapsed midway
through the country's term as EU president.
The turmoil pushed the Czech crown lower, and dealers said
bonds could face pressure on Wednesday.
An election delay would extend the rule of the non-partisan
interim cabinet led by Jan Fischer, which took over in May. It
was supposed to stand down after the election, called before
regular polls due in mid-2010.
The court said in a ruling posted on its website that it was
halting the validity of Klaus's decree calling the election
pending a full consideration of the deputy's complaint.
"It will be possible to set a new date for the election only
after a final decision of the Constitutional Court," the court
said in a statement.
The court did not say when it would rule on the complaint --
filed by independent Milos Melcak in protest of a law that cut
the four-year election period short after the centre-right
cabinet collapsed in March -- but it typically takes months.
Constitutional Court judge Vojtech Guettler told Reuters he
could not predict when the court would rule, and news website
www.ihned.cz quoted judge Eliska Wagnerova as saying she did not
expect the court would rule in time.
BUDGET IN FOCUS
Fischer said the government would discuss the developments,
and Klaus invited heads of political parties on Wednesday to
find a way out.
Fischer has fought for spending cuts to avoid the budget
deficit booming beyond 7 percent of the gross domestic product
next year, but has found little support among political parties.
Economists said, now that his cabinet could potentially stay
on longer, the outlook for public finances could worsen
significantly unless the main political parties shifted from
their pre-election aversion to belt-tightening.
"We've had this spiralling budget deficit which has gone
unchecked due to the impasse in politics, and it was assumed
that it had been left for the new government to sort out," said
Neil Shearing, economist at Capital Economics. "If we're left in
political impasse, the budget situation could get worse."
The news caused the Czech crown <EURCZK=> to extend losses
on the day amid a wider bout of risk aversion on global markets
that also hit the Polish zloty and Hungarian forint.
By close of domestic trading, the crown <EURCZK=> had fallen
0.8 percent to 25.614 to the euro. Bonds were muted but dealers
said they could face pressure on Wednesday.
Political leaders sharply criticised the court.
"I consider ... the ruling to be an irresponsible step that
can have fundamental negative impact not only on the political
development in the country, but also deepening of the economic
crisis," said the head of the right-wing Civic Democrats, Mirek
Topolanek, the prime minister in the previous government.
(Additional reporting by Jan Korselt and Jason Hovet; Writing
by Jan Lopatka and Michael Winfrey; Editing by Angus MacSwan)
