Pound hits record low vs euro, BoE weighs

LONDON, March 31 (Reuters) - Sterling slipped to a record low against the euro on Monday, extending its losing streak after figures showed British house prices fell for the sixth consecutive month in March.

Housing market research company Hometrack on Monday said UK house prices fell by 0.2 percent this month to stand just 0.4 percent higher from a year ago, further denting sentiment on the UK economy.

This led investors to drop the pound on the last day of the financial first quarter, adding to falls last week after the Bank of England emphasised that the British currency may have more room to fall.

"The market is playing on the back of what King and Bean said last week," said Micahel Klawitter, currency strategist at Dresdner Kleinwort in Frankfurt.

"Only a fool would try to stem the trend of sterling weakness which even the central bank seems to be supporting."

BoE Chief Economist Charles Bean last week said that Britain's big current account deficit would keep sterling under downward pressure, while Governor Mervyn King said the currency's recent dive had simply been a correction of a rally two years ago.

The euro nudged up 0.2 percent to a record high 79.44 pence EURGBP= on Reuters data, taking its year-to-date gains to around 8 percent.

Sterling fell 0.4 percent to $1.9865 GBP=, and hit an 11-year trough on the Bank of England's trade weighted measure at 92.80 pence =GBP.

The Hometrack housing data showed signs that demand was stabilising, with transaction levels picking up and new buyer registrations climbing for the second month.

Overall, however, the data was the latest in a string of figures suggesting that the British economy is continuing to slow.

Many in the market expect this may prompt the UK central bank to cut interest rates from 5.25 percent in April after trimming them in February, which would further erode sterling's rate advantage against the euro. (Reporting by Naomi Tajitsu, editing by Mike Peacock) (Additional reporting by Simon Falush)