Pound claws up from record low vs euro after Bank

LONDON (Reuters) - Sterling pulled away from a record low hit earlier versus the euro on Thursday after an expected Bank of England rate cut, with the bank's post-decision statement seen as fairly balanced in regard to further easing.

Set against a backdrop of poor economic data and increasing fallout from the global credit crunch, the Bank of England opted to ease borrowing costs for the third time in five months -- cutting by 25 basis points to 5.00 percent.

By contrast, the European Central Bank's focus on above-target inflation resulted in euro zone rates staying at 4 percent.

The BoE said in a statement following its decision that credit conditions had tightened and the availability of credit appeared to be worsening. At the same time the bank highlighted inflation risks.

Analysts said the Bank's comments pointed to further downside for sterling as more yield-eroding rate cuts were likely, but some said it lacked any urgency for aggressive easing.

"The statement left the door open to further easing, but didn't give any guidance on how fast or aggressive any future rate cuts might be," said Lena Komileva, G7 economist at Tullett Prebon.

"Having said that, of course structural UK fundamentals are more closely aligned with the United States than with the euro area. As a result of that, a combination of a continued dovish bias by the Bank versus a stubbornly neutral stance by the ECB is bound to weigh on sterling over the coming weeks."

The euro hit a record high at 80.29 pence but later wiped the gains to stand at 79.94 pence, down 0.2 percent on the day. The pound also bounced against the dollar to $1.9806, up 0.3 percent on the day.

On a trade-weighted basis, the pound hit an 11-1/2 year low at 91.90 but later recovered slightly to 92.10.