Czech crown draws support from c.banker's remarks

...policymaker cemented market expectations of a 25 basis point interest rate increase in July.

The crown, a popular source of cheap funds for investors because Czech rates are the lowest in the European Union, rose as high as 28.470 per euro before retreating. It traded broadly flat on the day around 28.255 by 1435 GMT.

CNB policymaker Pavel Rezabek told Reuters in an interview a record-high yield discount versus the world's major currencies was making the crown vulnerable and warranted a rise in the main policy rate to a near five-year high of 3 percent when the bank board meets on July 26 [ID:nL17811831].

The crown rose to seven-week highs and close the week 1.5 percent firmer against the euro on Friday, as investors grew wary about keeping exposure to riskier investments in high-yield assets -- or carry trades -- funded from crowns.

----------------- MARKET SNAPSHOT AT 1440 GMT ----------------- Crown/euro last deals at 28.262 (-0.01 pct) Crown/dollar at 20.500 bid (-0.03 pct)

5-year yield due Oct 2010 4.09 pct bid (-2 bps) 10-year yield due Jan 2016 4.46 pct bid (flat)

5-yr CZK/EUR mid yield spread -53 bps (vs -49) 10-yr CZK/EUR mid yield spread -15 bps (vs -13)

Current levels versus prior domestic close at 1500 GMT ---------------------------------------------------------------