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Czech Prime Minister Andrej Babis arrives at a news conference at government headquarters in Prague, Czech Republic, March 26, 2018. REUTERS/David W Cerny


PRAGUE (Reuters) - Czech Prime Minister Andrej Babis, heading a caretaker cabinet, would accept another candidate from his ANO party to lead a new government if proposed by President Milos Zeman, keeping options open as a political stalemate extends.

Billionaire businessman Babis won an election by a wide margin last October but has yet to win parliamentary confidence for a government. Talks over a coalition with his former ruling partner the Social Democats (CSSD) fell apart last week in a row over ministries.

He told newspaper Lidove Noviny in an interview published on Monday that his party's deputy chairman Richard Brabec could be an alternative candidate for prime minister although he did not expect such a change yet.

"If he (president Zeman) tells me that he wants to pick Richard Brabec, I will respect it," Babis said.

"But I don't expect such a move. The president keeps his word. He gave me a promise and time until the end of June. I did my best to reach an agreement with CSSD."

Babis is due to meet Zeman on Tuesday and has said his next step in forming a government would depend on that meeting.

Babis's ANO party lacks a majority in the lower house and lost a confidence vote in January for a minority cabinet.

Babis has previously said he is the only candidate for prime minister, although most of the other parties shun him mainly due to criminal charges which he is facing over an alleged fraud of European Union subsidies worth 2 million euros (£1.7 million) a decade ago.

He denies any wrongdoing.

Brabec, who serves now as environment minister, used to manage one of the companies of the Agrofert group which Babis was forced to move to a trustee fund in order to comply with a conflict-of-interest law.

Besides CSSD, ANO could lean on support from the Communists and the far-right, anti-EU SPD party. ANO party members have criticised such cooperation, even an indirect one, especially with the SPD.

Markets have largely shrugged off the protracted political stalemate - which is not unusual in Czech politics - with the economy roaring ahead and public finances in surplus.

(Reporting by Robert Muller; Editing by Keith Weir)

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