(Adds Livni comments, paragraphs 8-9)

BRUSSELS, Feb 23 (Reuters) - The Czech EU presidency expects a "bit of a rough start" if Benjamin Netanyahu becomes Israel's leader, Czech Deputy Prime Minister Alexandr Vondra said on Monday, adding there was no time to lose for the peace process.

Israeli President Shimon Peres on Friday asked Netanyahu, head of the hawkish Likud party, to form a new ruling coalition after an inconclusive Feb. 10 election.

Asked whether Netanyahu's nomination would be good for the peace process with the Palestinians, Vondra said: "That remains to be seen."

"I think we can have a bit of a rough start, but we need to move ahead with the peace process because the two-state solution road is narrowing," Vondra said on arrival at a meeting of European Union foreign ministers.

Netanyahu has said he would pursue peace with the Palestinians but shift the focus of U.S.-brokered negotiations from statehood issues, which have proved difficult to resolve, to more immediate economic and security concerns.

Political rivals Netanyahu and centrist leader Tzipi Livni agreed to hold further talks about a future government when they met on Sunday for the first time since the election.

Such a coalition might create a middle-of-the-road government immune from pressures from fringe parties.

But Livni, who as foreign minister led peace talks with the Palestinians, reiterated on Monday she was unlikely to join a Netanyahu-led government.

""What's before us is a coalition based on a right-wing that is not willing to advance processes that I believe in," Livni said in an interview on Israel's Channel 2 television.

Netanyahu held coalition talks on Monday with Defence Minister Ehud Barak, leader of the centre-left Labour Party.

Barak reaffirmed after the meeting that Labour, which finished in fourth place in the election, would go into opposition. But both he and Netanyahu said they would probably meet again to discuss the issue.

A narrow government comprised of hawkish factions could put Netanyahu on a collision course with the EU as well as with U.S. President Barack Obama and his promise to move quickly to a Palestinian statehood deal.

EU foreign ministers insisted on Monday that a two-state solution was the only option.

"It's simply not possible to abandon this strategy of two states living in peace and security," Italian Foreign Minister Franco Frattini said. "And I think prime minister-designate Mr Netanyahu will follow such a strategy."

Sweden's foreign minister, Carl Bildt, voiced concern over conditions laid down by some parties in the coalition talks.

The 27-nation EU should send the new Israeli government a strong signal that any programme that breached previous commitments to the peace process would be unacceptable, he said.

During Israel's Gaza offensive last month, the Czech EU presidency initially appeared to differ with other bloc members when a spokesman called the Israeli land assault "defensive, not offensive". It later said this was a misunderstanding. (Reporting by Ingrid Melander; additional reporting by David Brunnstrom, and by Jeffrey Heller in Jerusalem; Editing by Mark Trevelyan)

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