Pound hits 2-1/2 yr low vs dlr on Bank comments

LONDON (Reuters) - The pound hit a 2-1/2 year low versus the dollar, while stocks also dropped on Thursday after Bank of England policymaker David Blanchflower said there would be a deeper than forecast decline in the British economy and front-loaded rises in unemployment.

By 0921 GMT, sterling had fallen as low as $1.7460, a level last seen in April 2006. The FTSE 100 hit session lows following the comments, falling as low as 5,323.2, around 0.8 percent down on the day.

Traders seized on Blanchflower's comments after Bank governor Mervyn King's opening remarks to the UK Parliament's Treasury Select Committee that acknowledged slowing growth and rising inflation.

"What we're seeing is an acknowledgement that growth is going to be very weak, even while King is saying that we are seeing higher inflation," said Stephen Koukoulas, global strategist at TD Securities.

(Reporting by Naomi Tajitsu and Veronica Brown)