UPDATE 1-Czech crown scales new peak, neglects cbank warning

(Updates prices, adds trader quote, background)

PRAGUE, Dec 14 (Reuters) - The Czech crown rose to a new lifetime high versus the euro on Thursday, extending its year-to-date gains to nearly 5 percent despite the central bank expressing concern about its strength.

Euro selling by London banks initially sent the crown to 27.815 per euro <0#EURCZK=>, beyond a previous all-time peak of 27.820 reached in offshore trade on Nov. 30.

The currency later gained further ground and hit as high as 27.780 at 1355 GMT.

"Some London names are selling euros for crowns. So far it seems to be most probably linked to a one-off mid-sized commercial order," said one Prague-based dealer with a major international bank.

The crown's firming counfounded many analysts who turned bearish on the currency after Wednesday's data showing the 12-month current account deficit widened to an equivalent of 4.6 percent of GDP, more than double the 2.1 percent at end-2005.

It came despite Monday's warning by central bank Governor Zdenek Tuma in a Reuters interview that the crown's rise to record highs to the euro and the dollar over the previous weeks was on the verge of being "totally crazy".

The currency also ignored Thursday's collapse of talks on forming a new broad coalition government, which extended a political crisis lasting since an election in June.

The crown has underperformed central European emerging market currencies over the past weeks, weighed down by a record one percentage point short-term rate discount versus the euro zone and a deepening current account shortfall.

Low borrowing costs, at 2.50 percent the lowest in the European Union, have prompted many market players to sell the crown to buy the other, higher-yielding regional currencies in the so-called carry trade.

Dealers said it was unclear whether the currency's rise on Thursday reflected unwinding of selling positions in the crown. ((Reporting by Marek Petrus; Editing by Gerrard Raven;

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))

Keywords: MARKETS CZECH CROWN RECORD