Interest rate cuts compound fears and stocks sink

By Daniel Bases

NEW YORK (Reuters) - A flurry of deep central bank interest rate cuts, designed to bolster investor confidence, failed to prevent world stock markets from sliding on Thursday, as the prospect of recession loomed in Europe and the U.S.

U.S. Treasury bonds, normally a safe-haven when stocks fall, were also lower ahead of a large issuance meant to help the U.S. government fund it's bailout of banks and the economy.

The pound lost ground after the Bank of England made a hefty 1.5 percentage point cut to its benchmark interest rate, dropping it to a more than half-century low of 3.0 percent.

The euro, and Swiss franc also fell against the U.S. dollar after both the European Central Bank and the Swiss central bank cut benchmark rates by half a percentage point. The Czech Republic also cut rates more than expected, causing the crown to fall versus the euro.

Emerging market stocks and bonds also dropped in line with the rout in developed economies.

In the United States, a gloomy sales outlook for technology bellwether Cisco Systems , and the worst monthly sales data in a decade for U.S. retailers contributed to weakness in U.S. stocks.

Thursday's decline in U.S. equities follows the biggest post-U.S. presidential election day drop ever.

However, benchmark U.S. stock indexes are still about 10 percent above their lows seen in late October.