* Riksbank leaves repo rate unchanged at 0.25 pct as fcast
* Further 100 bln SEK loans planned for banks at fixed rates
* Cbank says rate to stay until autumn 2010
* Two deputy govs thought growth fcasts may be too modest
(Adds quotes from press conference, more details)
By Anna Ringstrom and Mia Shanley
STOCKHOLM, Sept 3 (Reuters) - Sweden's central bank kept its key interest rate at 0.25 percent on Thursday but surprised markets with plans to keep borrowing costs at their lowest level on record for a year more to revive a battered economy.
Some analysts had expected the Riksbank to flag plans for modest tightening in the coming quarters in light of an improving economy.
The central bank said while there were signs of a recovery, future developments were still uncertain and it expected the rate to remain at this level -- the lowest since records began in 1907 -- until the autumn of 2010 to ensure a stable recovery.
It underlined the point by announcing another round of ultra-cheap loans for the banking sector, a move seen as an effort to make sure market rates stay low.
Both the Riksbank and economists agree the economy is on the mend, so the central bank's belief that borrowing costs would need to stay at a minimum for so long struck some as puzzling.
"This was very soft I must say," said Stefan Hornell at Handelsbanken. "They are keeping their repo rate path unchanged and are revising up the GDP growth for next year. They really want to push down interest rates and make sure this recovery really takes hold before they begin raising the repo rate."
The Riksbank announced another 100 billion Swedish crowns in loans for banks at fixed rates to encourage lending and help the country climb out of its worst recession in more than half a century.
Central Bank Governor Stefan Ingves told a news conference he could not say if the Riksbank would issue more fixed-rate loans and that purchases of government bonds were not called for at present, though this remained one avenue of action if needed.
He emphasised that while the worst was behind Sweden, the overall recovery would take time, a message which is likely to be echoed by the European Central Bank later in the day.
"They join other central banks in their message that it's too early to start easing," Elisabet Kopelman at SEB said.
The ECB kept interest rates at 1.0 percent on Thursday, as expected by all 80 economists polled by Reuters.
"THE DANGER IS OVER"
The Riksbank said there were increasing signs of a recovery in the economy and financial markets.
"The danger is over in the sense that we don't see a further fall in production, neither in Sweden nor globally, or concerning world trade," Ingves said.
Swedish consumer confidence jumped into positive territory in August for the first time in more than a year, retail sales topped forecasts in July and Sweden's jobless rate fell to 7.9 percent in July from nearly 10 percent in June.
But the Riksbank the future was still uncertain: "Sweden has been hard hit by the deep recession abroad and the recovery in economic activity is from a low level."
It forecast the economy will contract 4.9 percent this year, better than the 5.4 percent contraction seen in July, and return to growth of 1.9 percent next year.
The Swedish crown weakened after the announcement, with the euro rising to a session high of 10.3480 crowns from around 10.29 crowns before the decision, Reuters data showed. "This was definitely more dovish than we had expected -- one would have thought they would have absorbed more of the latest signals (about the economy)," said Johanna Jeansson, analyst at Nordea.
But there was division among Sweden's rate setters. Two supported the decision to hold rates but said growth forecasts may be too modest, meaning rates would have to be raised slightly earlier than forecast.
Deputy Governor Lars Svensson, meanwhile, advocated cutting interest rates to zero and holding them there for a year ahead.
The Swedish government has expressed concern about the impact of swelling unemployment levels on the economy as firms tread carefully despite a stabilisation in overseas demand.
The export-oriented country slipped into recession late last year as the global financial crisis hit demand, leaving firms such as world number two truck firm Volvo scrambling to cut costs and slash jobs. (Additional reporting by Niklas Pollard, Simon Johnson, Nicholas Vinocer, Victoria Klesty, Daniel Dickson and Johan Sennero) (Editing by Mike Peacock and Andy Bruce)