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The Czech Republic's biggest car maker, Skoda Auto, expects to produce around 580,000 cars next year, board member Martin Jahn announced on Thursday. The car maker, part of the Volkswagen Group, said it had manufactured more than half a million cars for the first time in a single year on November 22. Company managers expect the final 2006 figure for production and sales to exceed 530,000 vehicles.

Talks on forming a broad coalition government in the Czech Republic collapsed on Wednesday night when the Civic Democratic Party abruptly ended talks with its main rival -the Social Democratic Party. Prime Minister Mirek Topolanek said that differences over policy issues and the make-up of the cabinet were too great to overcome. The Civic Democrats said they would renew talks on a three party right-wing cabinet with the Christian Democrats and the Greens, in the hope that some rebel Social Democrat deputies would support it.

Milos Melcak, a rebel deputy for the Social Democrats who recently left the party's deputies' group in the lower house is threatening to tip the balance of power and support a right-wing cabinet. Mr. Melcak said his party should accept its election defeat and go into opposition before it loses more public support. If supporting a right wing cabinet would get it there, Mr. Melcak said, he would be prepared to do that. Fearful of a rebellion in the Social Democrat camp, the party leader Jiri Paroubek has made all the Social Democrat deputies sign a pledge that they would remain loyal to the party line. He said on Thursday he wanted all rebels expelled from the party.

Reacting to the latest developments President Klaus said on Thursday that Prime Minister Topolanek could give up his chance to form a government, opening the way for someone else to be entrusted with the task. The second chance at forming a governments ends with a confidence vote, Mr. Klaus said. If Mirek Topolanek should decide not to see it through I would search for a different solution, find a different candidate, the president said. The Civic Democratic Party said this was highly improbable.

Social Democrat leader Jiri Paroubek has requested a meeting with President Klaus in order to discuss the latest political developments. Mr. Paroubek said he hoped the president would stick to his word and refuse to appoint a government based on one or two turn-coats. The Social Democrat leader said the rival Civic Democrats were entirely to blame for the present situation, since the only way out of the deadlock was an agreement between the two strongest parties.

Christian Democrat leader Jiri Cunek has said he will not support a government which would have to rely on a number of turn-coats. Mr. Cunek said the falling out between the two strongest parties was "unfortunate" and that if they could not agree on a stable government his party would prefer to support early elections.

The Social Democrats suspect that one of their deputies has been bribed by the Civic Democrats, who are in the process of forming a new government. Deputy Milos Melcak recently left the deputies' group in parliament saying he was facing pressure from party colleagues for voicing that the party should go into opposition. Mr Melcak has not ruled out that he might vote for the new government of Prime Minister and Civic Democrat leader Mirek Topolanek regardless of his party's stance.

A group of Austrian environmentalists are threatening to block up to six Czech-Austrian border crossings this weekend. The activists will stage the blockade if the Austrian parliament fails to approve a resolution that favours filing a law suit against the Czech Republic over the Temelin nuclear power plant. The activists say the Temelin plant in south Bohemia - just 50 km from the Austrian border - is not safe and should never have been put into operation.

The Czech crown reached a new record high with an exchange rate of 27.86 crowns to the euro on Wednesday. The crown also firmed to the US dollar with an exchange rate of 21.00 crowns to the dollar.

The lower house of Parliament has approved the state budget for 2007 with a state income of 949.5 billion crowns (over 45 billion US dollars) but a 91.3 billion crown (an estimated 4.3 billion US dollars) deficit. Deputies from the Civic Democratic, Social Democratic, and Christian Democratic parties voted in favour of the budget, while the Communists and the Greens opposed it.