By Sebastian Tong

LONDON (Reuters) - Weak housing data knocked the pound to a 12-year low on Thursday, weighing on European stocks already under pressure as oil prices edged up on supply concerns over a brewing tropical storm in the Gulf of Mexico.

Rising fuel costs compounded investor worries over the global economy even as the euro advanced further from Tuesday's six-month low against the dollar on the back of hawkish comments by euro zone central bankers.

August data showing the biggest annual drop in British house prices since 1991 sent sterling to its lowest level on a trade-weighted basis since October 1996 and close to a record low against the euro.

"The (UK) housing market downturn seems to be gathering pace which delivers a further blow to consumer spending as the wealth accumulation from the housing market dries up," said Adam Cole, global head of foreign exchange strategy at RBC Capital Markets.

Signs of the global economic slowdown was evident elsewhere with Toyota Motor Corp (7203.T: Quote, Profile, Research), the world's biggest automaker, cutting its 2008 sales forecast by nearly 7 percent. ID:nT6192

Asian stocks continued to languish around two-year lows while the MSCI main world equity index .MIWD00000PUS remained flat. Emerging stocks .MSCIEF dipped 0.4 percent.

GLOOM AND GUSTAV

Quarterly results are also doing little to dispel the gloom among investors.