Slovak crown nears 3-mth lows vs euro, eyes ECB

...currencies ahead of a European Central Bank rate decision, dealers said.

At 0850 GMT, the crown was at 34.111 per euro , compared with 34.160 seen earlier in the session, and a three-month low of 34.180 from May 30. The unit closed at 34.038 on Tuesday.

"There was a solid demand (to buy euros) from London and the crown weakened more or less in line with the region," said VUB Bank chief trader Mario Mika. "But local clients have been partly offsetting the move so far."

Dealers said the ECB's remarks, after its policy meeting ends later on Wednesday, might set further direction for the crown in the short term.

"If (ECB's President Jean-Claude) Trichet is more bullish on rates than the market is expecting ... we could go higher (weaker) towards 34.200 or test this level," Mika said. "But there is a very strong resistance at 34.200."

The ECB is expected to lift interest rates by 25 basis points to 4.0 percent, narrowing the differential against the Slovak benchmark to 25 basis points.

Investors expect further ECB policy tightening to at least 4.25 percent this year. ----------------MARKET SNAPSHOT AT 0850 GMT------------------- Crown/Euro 34.111 vs 34.038 on Tuesday (-0.21 pct) Crown/Dollar 25.228 vs 25.134 (-0.37 pct) 5-yr govt bond yield 4.443/4.292 vs 4.434/4.134 pct 7-yr govt bond yield 4.719/4.499 vs 4.569/4.369 pct --------------------------------------------------------------