Pound tumbles on concerns about economy

By Masayuki Kitano

TOKYO (Reuters) - The pound fell versus the dollar to its lowest level in more than two years and slid to a record low against the euro on Monday, after Chancellor Alistair Darling said the country's economic downturn might be the worst in 60 years.

The dollar approached an eight-month high against a trade-weighted basket of currencies .DXY. The yen jumped to a five-month high vs sterling and a four-month peak against the euro, and also rose against the Australian and New Zealand dollars.

Gerrard Katz, head of North Asia FX trading at Standard Chartered in Hong Kong, said the market's volatility was due to stop-loss selling in a variety of sterling pairs, along with euro/yen and some others.

"Certainly no one's rushing to buy cable at the moment," Katz said. "There was a lot of weekend press about how bad the UK economy is at the moment, so that's weighing on the market."

The pound fell more than one percent versus the dollar at one point following the comments by Chancellor of the Exchequer Alistair Darling, which were printed in the Guardian newspaper on Saturday.

Darling said in an interview that Britain's economic downturn is likely to be deeper and last longer than originally feared.

Sterling fell to as low as $1.8005, its lowest level since April 2006. It later trimmed some losses to stand at $1.8047 for a decline of 0.9 percent on the day.

STERLING'S WEAKNESS