UPDATE 1-Slovak crown hits new record after euro peg shift

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BRATISLAVA, March 19 (Reuters) - The Slovak crown jumped by more than 3 percent to new record highs against the euro early on Monday after revaluation of the currency's parity in the exchange rate mechanism ERM-2, dealers said.

Traders said the crown quickly moved to 32.950 per euro in early trade, and that it later extended its gains to 32.850. It closed local trading at 33.94 per euro on Friday.

Late on Friday, the EU executive Commission announced the approval of a Slovak request to revalue the crown's parity in the ERM-2, a precursor to euro adoption, by 8.5 percent.

The new parity rate agreed by euro zone countries, the European Central Bank and other ERM-2 members was set at 35.4424 per euro.

The crown is allowed to move up and down 15 percent around the central level, a band within which countries must prove currency stability for at least two years before entering the euro zone.

The parity shift followed a steady crown rise in the past few weeks, fuelled by Slovakia's booming economy, foreign direct investment deals and prospects of euro adoption in 2009.

"Parity revaluation opens more room for firming and it is therefore attracting new investors to crowns, who previously saw only limited room (within the old fluctuation band)," Slovenska Sporitelna analysts said in a market report.

The central bank had fought against the crown's climb in 2006 and this year, using direct interventions and flooding the money market with excess liquidity.

Analysts said the parity revaluation was a sign the NBS had now become more tolerant of a strong crown, which is helping it curb inflation ahead of planned euro zone entry.

"We think the NBS will let the crown firm for now without interventions, and we also do not predict reduction in interest rates for the time being," Slovenska Sporitelna said.

Slovak Finance Minister Jan Pociatek and central bank Governor Ivan Sramko will hold a briefing on the ERM-2 parity change at 9.30 a.m. (0830 GMT).