RPT-Yield falls at Czech 10-yr auction, eurobond plan helps

                                
 (Repeats story published late on Wednesday)
                                
 * Yield on 10-year bond edges lower in second auction
                                
 * Eurobond plans ease pressures on domestic prices
                                
 
                                
 PRAGUE, April 22 (Reuters) - The Czech Republic sold more of
its 10-year bond than planned at an auction on Wednesday, and 
yields dipped from the paper's inaugural sale last month in a
bullish response to government plans to issue a eurobond.
                                
 The Finance Ministry sold 7.78 billion crowns ($372.4
million) worth of the 5.00 percent coupon government bonds
<CZ1002471=> to investors, and took 1.5 billion onto its books.
                                
 It had offered 7 billion crowns in the two auction rounds,
and demand reached 17.5 billion.
                                
 The average yield dropped to 5.479 percent from 5.619
percent in a March auction, and the difference between the
highest accepted yield and average yield narrowed to 4 basis
points from almost 13 basis points.
 "This improvement (in yields) can be connected to the
announcement of the minister of finance that they want to issue
a eurobond," Ceska Sporitelna analyst David Navratil said.
                                
 "This can support asset swap spreads... Also the global
sentiment is better than just a few months ago."
                                
 The 10-year bond was quoted at 95.65/97.15 on Wednesday,
yielding 5.579/5.375 percent, with the asset swap spread down at
169.7 basis points from a March high of 204.8, according to
Reuters trading system.
                                
 "The auction was well bid. Prices in asset swap terms were
better than in previous auctions," a fixed income dealer said.
                                
 "We seem to have seen some bottom (on prices) so it is
optimistic for the finance ministry."
                                
 Falling spreads on Czech debt have opened a window for the
Czechs to look again at an eurobond issue, Finance Minister
Miroslav Kalousek told Reuters on Tuesday, although no official
plans are yet announced. [ID:nLL266269]
                                
 The ministry had scrapped plans in February when credit risk
prices spiralled to record highs on worries over central
European growth, financing, and banks.
                                
 The Czechs have sped up borrowing since March but at higher
yields, taking advantage of improved sentiment toward emerging
assets after global stocks recovered and the International
Monetary Fund pledged to make more funds available.
                                
 The pickup in sentiment has prompted Hungary, which got a
$25 billion IMF lifeline in October, to restart regular debt
auctions this week for the first time since the autumn.
                                
 Falling western demand for Czech-made cars and electronics
has pushed the country into a likely 2 percent economic
contraction this year, squeezing government revenue and raising
spending on measures to support jobs and companies.
                                
 On Monday, Kalousek said the 2009 public sector deficit
could widen to 5 percent of gross domestic product from 1.5
percent last year.
 *For a table with Wednesday's auction click on [ID:nPRA002520]
 (Reporting by Jason Hovet; Editing by Ruth Pitchford/Victoria
Main)