UPDATE 2-Swedish c.bank minutes raise chance of another rate cut

* Deputy govs Jansson and Wickman-Parak considered bigger cut

Analysts say minutes dovish, raise chance of another rate cut

(Adds further comment, updates crown reaction)

By Simon Johnson

STOCKHOLM, Jan 8 (Reuters) - Sweden's central bank considered a bigger rate cut last month before deciding on a quarter point reduction, the minutes of its meeting showed, bolstering market expectations it will ease policy again by April at the latest.

After a strong start to last year, Sweden's export-dependent economy has slowed sharply. It could even have contracted in the final quarter of 2012 and analysts reckon the central bank will cut the repo rate again.

The Riksbank, which cut interest rates three times last year including last month, had appeared reluctant to ease policy further due to concerns about household debt levels. However, the December minutes, released on Tuesday, showed a shift in tone.

The bank considered a 50 basis point cut in the repo rate, the minutes showed, before settling on a quarter point reduction to 1.0 percent.

"You get the impression that a 50 point cut was more on the cards than one might have thought and that raises the chances for a cut in February," said Olle Holmgren, an economist at SEB.

The market is pricing in a roughly 34 percent chance of a cut in February and a near 70 percent chance of a cut in April, according to SEB.

The Swedish crown weakened to around 8.57 to the euro at 1021 GMT after publication of the minutes, from around 8.53 beforehand.

Yields on two-year Swedish debt were also lower.

Previously, hawkish deputy governors Barbro Wickman-Parak and Per Jansson both mulled the idea of a bigger cut before backing the smaller reduction last month.

Jansson warned the economy could underperform the Riksbank's forecast for a 0.2 percent quarterly contraction in gross domestic product in the fourth quarter of 2012.

"Mr Jansson said that he could easily see developments being even weaker than now assumed in the draft Monetary Policy Update," the minutes said.

However, Jansson said that a more cautious approach would sit better with worries about high levels of household debt.

Weaker domestic conditions also prompted Wickman-Parak to turn more dovish after saying she had initially advocated no change in policy or the repo rate path.

She also considered a 50 basis point cut - something she said could have some advantages - but said it probably would not help the economy much.

"Cutting the repo rate by 50 basis points would have the effect of surprise, which could affect the krona exchange rate and provide some support to exports," she said, according to the minutes.

"But this support should not be exaggerated, as the problem essentially concerns weak demand from abroad."

Deputy governor Kerstin af Jocknick, another of the more hawkish rate s etters on the six-person board, said she was less worried about household debt levels.

"Given the weak economic situation and the pessimistic household sector, she envisaged limited risks from household debt in the short term," the minutes said.

Long-term dove Deputy Governor Lars Svensson wanted a 50 point cut in December. Deputy Karolina Ekholm supported the rate cut but favoured easier policy ahead.

Announcing its rate decision last month, the central bank said it expected policy to stay on hold for the coming year, though it left open a very slight chance of a cut.

Recent data, such as industrial production and PMI, point to a worsening in the economic outlook.

Toughening conditions for exporters such as truck maker Volvo and mining equipment firm Atlas Copco are showing in signs of increasing unemployment and fading consumer confidence.

The Riksbank is due to announce its next rate decision on Feb. 13.

(Reporting by Patrick Lannin, Niklas Pollard, Helena Soderpalm and Daniel Dickson; Editing by Alistair Scrutton and Susan Fenton)