Sterling hurt by Weale comments and weaker stocks

* Sterling hits one-mth low then recovers as dlr falls

* BoE's Weale: UK faces risk of recession

* Stocks losses also push sterling lower

By Naomi Tajitsu

LONDON, Aug 24 (Reuters) - Sterling hit a one-month low against the dollar on Tuesday, stung by comments from a Bank of England policymaker that Britain faces the risk of sliding into recession.

It recouped some of those losses after the dollar .DXY fell on gloomy U.S. housing numbers. But any bounce was likely to be shortlived as traders said a fall in stocks, implying a decline in investor appetite for risk, would keep sentiment skittish as the pound is considered a higher-risk currency.

In an interview with a UK newspaper, Martin Weale, the newest member of the BoE's Monetary Policy Committee, was also quoted as saying the central bank's growth forecast for this year and next may be too optimistic. [ID:nLDE67N00K]

His comment drove the pound GBP=D4 down nearly 1 percent on the day against the dollar to $1.5373, its weakest since late July. By 1504 GMT, sterling recovered some ground to trade at $1.5455, still down 0.35 percent on the day. The BoE is expected to keep interest rates at a record low 0.5 percent well into 2011, and the central bank has said it remains ready to add more stimulus to the economy if necessary.

Analysts said sterling would be vulnerable in the future to dovish comments similar to Weale's.

"Weale's comments were not too surprising, but it helped produce some weakness in sterling given overall dollar strength," said Steve Barrow, head of G10 currency research at Standard Bank. "At the moment, the doves have the upper hand."

A nearly 1.5 percent slide in UK shares .FTSE also added to selling pressure on the pound, while traders cited selling by eastern European names.

"When equities are down, cable will head lower too but this isn't massive risk aversion," Peter Frank, currency strategist at Societe Generale. "Sterling vols are still quite low, which shows there isn't panic in the market."

Sterling three-month implied volatility GBP3MO= was at around 11.75, down from a peak of 12.35 on Aug. 13.

VULNERABLE ON THE CHARTS

Sterling extended losses on Tuesday after it broke under its 200-day moving average at $1.5469. A close below that level would open the door to more losses, technical analysts said.

They added that sterling's next support level lay at $1.5322, the 38.2 percent retracement of the pound's rally from May 20 to early August, when it hit a six-month high near $1.60.

Losses against the dollar helped push sterling lower against the euro EURGBP=D4, which rose more than half a percent to the day's high of 82.19 pence, pulling away from 81.43 pence hit on Monday, its weakest in nearly eight weeks.

Technical analysts at Commerzbank said the euro has not sustained a break below 81.67 pence -- the 78.6 percent Fibonacci retracement of its June/July rally.

But they added the euro's outlook remained dim and that the near-term target was 80.67 pence, a low hit in June.

Sterling fell sharply against the yen GBPJPY=R, hitting a three-month low of 128.82 yen.

The Japanese currency rallied across the board after comments by Japan's finance minister stoked speculation the authorities would not step in to curb yen strength for now. [ID:nTKX006945]

(Additional reporting by Neal Armstrong; editing by Nigel Stephenson)