Czech crown firms to 3-mth highs on London buying

PRAGUE, Oct 30 (Reuters) - The Czech crown firmed to three-month highs versus the euro on Monday on buying by big London-based investment banks, amid signs that the five-month-old political crisis may end soon.

The Czech currency extended its advance into a third consecutive session, gaining 0.6 percent on the day to 28.091 per euro <0#EURCZK=> by 1440 GMT. It has risen 1 percent since Friday's opening.

"Only explanation I can think of is that there is a large corporate deal going through the market," said one London-based emerging markets dealer with a global investment bank.

Other dealers said hedge fund investors might have snapped up the currency following its weakening towards 28.50 per euro earlier this month, which forced some players to sell euros for crowns this week to avoid losses on their positions.

"There may be some hedge fund orders, and it is also possible that bets are being taken that there could soon be an agreement on calling early elections," said one Prague-based dealer with a major international bank.

Investors would probably welcome early polls to end a stalemate in the lower house that followed an inconclusive June general election, as opinion polls have raised the chances of a strong, pro-reform goverment emerging from a new vote.

----------------- MARKET SNAPSHOT AT 1341 GMT ----------------- Crown/euro <EURCZK=> last deals at 28.091 (+0.60 pct) Crown/dollar <CZK=> at 22.091 bid (+0.43 pct) 5-year yield due Oct 2010 <CZ5YT=RR> 3.61 pct bid (-8 bps) 10-year yield due Jan 2016 <CZ10YT=RR> 3.85 pct bid (-2 bps)

5-yr CZK/EUR mid yield spread <DE114147=> -13 bps (vs -7) 10-yr CZK/EUR mid yield spread <DE113529=> 8 bps (vs 7)

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

((Reporting by Marek Petrus; Editing by David Christian-Edwards; Reuters Messaging: rm://marek.petrus.reuters.com@reuters.net; e-mail: prague.newsroom@reuters.com or marek.petrus@reuters.com; Tel: +420 224 190 477))

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Keywords: MARKETS CZECH CROWN AFTERNOON