* Danish c.bank cuts lending rate 10 bps to 1.35 pct
* Cuts CD rate by 10 bps to 1.25 pct
* C.bank says cut is consequence of crown's strength
By John Acher
COPENHAGEN, Aug 27 (Reuters) - Denmark's central bank trimmed its key lending interest rate by 10 basis points to 1.35 percent on Thursday to ease upward pressure on the crown and narrow the spread to the euro zone.
Growth in the foreign-exchange reserves of the central bank, whose monetary policy aims to keep the crown within a 2.25 percent band to the euro, sometimes triggers interest rate changes.
"The reduction is a consequence of purchases of foreign exchange in the market," Nationalbanken said in a statement, giving the same reason for the cut as it did when it last trimmed the lending rate by 10 bps on Aug. 13.
The bank gave no other explanation for the cut, which narrowed the gap to the ECB's refinancing rate to 35 basis points, and its spokesman Karsten Biltoft declined to comment further.
The bank's foreign exchange reserves climbed by 6.2 billion crowns to 336.4 billion in July, and the bank is scheduled to release its August reserves figures on Sept. 2.
The bank's forex reserves have risen every month since October 2008 when they fell to 132.4 billion crowns. "The lower rate should be viewed in light of the bulging foreign reserves, which continue to increase, and the strong Danish crown," Danske Bank chief economist Steen Bocian said in a note to clients.
"We expect one further independent Danish interest rate reduction in the autumn - so the spread (over ECB rates) will come down to 25 bps," Bocian said.
The Danish crown softened only marginally on the news,
7.4436 to the euro
The crown has firmed from levels around 7.45 to the euro seen in early May and from a 2009 trough of 7.4567 in March.
The bank's monetary policy aims to keep the currency steady around its central parity of 7.46038 per euro and between 7.2925 and 7.6282 crowns.
"With today's rate reduction, we are starting to believe that the Nationalbank is about to reach the bottom for rates, though we do not rule out that rates could be cut by a further 0.10 point so that the spread to the ECB would be reduced to 0.25," Jes Asmussen, chief economist at Handelsbanken Capital Markets in Copenhagen, said.
THIRD INDEPENDENT CUT
The cut was the Danish central bank's 10th since it began easing from 5.50 percent in November 2008 as the global financial crisis deepened.
It was the bank's third independent rate cut -- two 10 bps cuts in August and one 10 bps reduction in June -- since May when it last lowered rates simultaneously with the ECB.
"The recent series of autonomous Danish interest rate cuts may be seen as a healthy sign for the Danish economy," said Jacob Olsson, economist at Realkredit Danmark.
"Investors have regained so much confidence in Denmark since the financial crisis was raging for real that they do not need to be compensated with a large yield premium for investing in Danish papers," Olsson said. "If the dramatic inflow of foreign exchange continues, it could point to a further rate cut," Olsson said. "We expect the interest rate spread between the leading interest rates in Denmark and in the euro area will drop to 0.25 percentage point before the end of year."
The bank lowered its certificate of deposit rate by 10 basis points to 1.25 percent. (Additional reporting by Ole Mikkelsen, Teis Jensen, Henriette Jacobsen and Martin Dahl; Editing by Toby Chopra and Andy Bruce)