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Czech Prime Minister Andrej Babis arrives at a European Union leaders summit in Brussels, Belgium, March 22, 2018. REUTERS/Francois Lenoir

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PRAGUE (Reuters) - The Czech ruling ANO party agreed on Thursday to restart negotiations with the centre-left Social Democrats to form a new government to avoid a deal involving an anti-European far-right party.

The decision is a latest swing in nearly six months of talks to form a government following an election which the centrist, populist ANO won but fell short of a majority.

The biggest obstacle to a deal has been the position of ANO leader Andrej Babis himself.

Most parties have refused to form a cabinet with ANO if the party's billionaire founder is prime minister, due to conflicts of interests stemming from his business, and police charges that he had broke rules to qualify for a 2 million euro EU subsidy.

He denies any wrongdoing and insists on staying on as prime minister, a position he took in December in an ANO-only minority cabinet. The administration lost a vote of confidence in January and has since served in a caretaker capacity, pending talks on a new administration.

ANO had earlier tried a coalition with the Social Democrats (CSSD), a pro-EU party that ruled with ANO in 2014-2017. But their talks collapsed last week because ANO refused to yield the Interior Ministry, which the prospective partner demanded to make sure Babis has no influence over his investigation.

"The movement's leadership requests the negotiating team to restart talks with the CSSD," Babis said on Twitter after ANO leadership met on Thursday, without further details.

It was not immediately clear what a new offer from ANO could look like.

Social Democrat leader Jan Hamacek said he would hear the ANO out.

"The CSSD is always open to serious negotiation for the benefit of this country," he tweeted.

An ANO-CSSD coalition would have 93 votes in the 200-seat lower house of parliament and would require votes from the far-left, anti-NATO Communist party. Both ANO and the Social Democrats have said this was acceptable given the government would maintain a pro-EU course.

Babis has sniped at Brussels, especially due to Czech opposition to taking in asylum-seekers, but at the same time has been keen to build an image of an effective negotiator on the European scene and has stressed the importance of firm anchoring of the central European country in the EU.

This has set Babis aside from Poland and Hungary whose leaders have been keen to pick fights with Brussels.

The alternative for ANO, backed by the pro-Russian president Milos Zeman, was a minority cabinet backed by the Communists as well as the anti-immigration SPD.

That option proved too much to accept for a number of ANO's 78 lawmakers, including several ministers who said they would not serve in a cabinet propped up by the far-right.

(Reporting by Robert Muller; Writing by Jan Lopatka; Editing by Toby Chopra)

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Reuters