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UPDATE 1-Swiss franc rises to near 7-year high as safe-haven flows resume

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(Adds detail, analyst comment)

ZURICH, Jan 24 (Reuters) - The Swiss franc rose 0.2% early on Monday as safe-haven inflows driven by concerns over Ukraine pushed the currency to its highest level against the euro in nearly seven years.

The franc reached 1.0325 euros, its highest level against the common currency since June 29, 2015.

Concerns about the security situation on Ukraine's border with Russia as well as the possibility of a snap election in Italy were driving investors' demand for the franc, analysts said.

"Given that the Japanese yen is also up, and to some extent gold, it points to an increase in safe-haven demand," said Maxime Botteron, an economist at Credit Suisse.

"It clearly seems that we have another risk-off move today – mainly in equity markets but that spills over to FX," said Karsten Junius, an economist at J.Safra Sarasin.

"Additionally, I can fully understand that some investors are getting more nervous about the developments in Ukraine which is then leading to a stronger CHF as well."

Short investors, who bet on a currency losing value, have reduced their positions, fearing a rise in the franc, Rabobank said in a note.

"CHF net short positions edged lower for a second consecutive week to the smallest level since September," Rabobank said.

Data released on Monday showed the Swiss National Bank had been relatively inactive in the currency markets to stem the franc's rise.

Sight deposits, which are seen as a proxy for the central bank's foreign currency purchases, rose by only 268 million francs last week, according to SNB data.

Still, Credit Suisse's Botteron said as the franc's appreciation was not based on economic fundamentals the SNB was likely to intervene to block further rises. The central bank did not respond to a request for comment.

"They have said they remain willing to intervene in the markets, and I think this commitment and also more interventions will prevent the franc rising much higher," Botteron said. (Reporting by John Revill; Editing by Gareth Jones and Hugh Lawson)

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