Pound and stocks slump after weak GDP data

LONDON (Reuters) - The pound tumbled to its lowest level against the dollar since 2003 after data showed the UK economy contracted by 0.5 percent in the third quarter, building fears of a prolonged recession.

This marked the first contraction since 1992 and was lower than analysts' forecasts for a smaller fall of 0.2 percent.

Sterling was last down 5.84 percent at $1.5484, while the euro rose to a seven week high above 81.0 pence.

"The fourth quarter is going to look even worse, so we are looking at fairly deep recession," aid Nick Kounis at Fortis.

"We expect the BoE to cut the Bank Rate by 50 basis points at the November MPC (Monetary Policy Committee), but this report raises the risk of even more aggressive action," he added.

The FTSE 100 extended losses after the data to fall 6 percent to 3842.84, from 3877.10 before the data.

December gilt futures rallied after the data.

(Reporting by London Markets Team)