FOREX-Euro gains, pound off lows after big rate cuts

* ECB cuts rates 75 bps, BoE by 100 bps

* Euro rises versus dollar, sterling off lows

* Riksbank slashes rates by 175 bps, RBNZ cuts by 150 bps

* For up-to-the-minute market news, click on FXNEWS (Recasts, updates prices, adds quotes)

By Nick Olivari

NEW YORK, Dec 4 (Reuters) - The euro rose and sterling traded off the session low against the dollar on Thursday, with investors satisfied with the aggressive easing in benchmark rates by the European Central Bank and Bank of England.

ECB President Jean-Claude Trichet, speaking after the central bank cut interest rates by 75 basis points to leave its benchmark rate at 2.5 percent, lowered euro zone growth expectations for both 2008 and 2009. Yet investors still pushed the currency higher. [ID:nWEA8073] and [ID:nL4470109].

The Bank of England cut its benchmark rate by 100 basis points to 2 percent, the lowest level since 1951, and said further steps would be required to prevent a credit squeeze tipping Britain's economy into deep recession. [ID:nL4304319].

"It comes back to the theme of proactive rate cuts are seen to be beneficial for the longer-term economic outlook," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.

"Had they done only 50, you probably would see the euro under pressure more than it is," Dolan said of the ECB.

Midway through the New York session, the euro was up 0.8 percent against the dollar at $1.2812, more than two cents from the session low of 1.2550. The pound was little changed at $1.4769 , having earlier touched a more than 6 year low of $1.4471.

The pound hit a record low against the euro at 86.95 pence . The yen gained, with the dollar last down 0.5 percent at 92.91 yen.

Worries about world economic health kept investors wary of taking on riskier positions, helping to boost the low-yielding yen broadly.

RATE CUTS

A surprisingly big 175 basis point cut in Swedish borrowing costs earlier [ID:nWEA7995] and a large 1.5 percentage point move from the Reserve Bank of New Zealand [ID:nWEL81490] had already set the tone for aggressive action.

The ECB, seen by some market participants as being behind the curve in lowering borrowing costs to boost growth, went for a bolder than expected cut while the BoE disappointed some investors who had speculated on a move similar to the 150 basis point reduction imposed in November.

"The central banks are responding with considerable verve. They recognise the urgency with which they have to cut rates (and) I don't think this is surprising anybody. If it was any less the markets would have been a bit upset about it," said Mike Lenhoff, chief strategist at Brewin Dolphin in London.

Falling interest rates across the globe take away the yield attraction of currencies whose countries previously had high interest rates, giving further support to the yen and the dollar and weighing on higher-yielding units.

Meanwhile, news on the deteriorating state of economies around the world continued to weigh on market sentiment.

U.S. initial claims for state unemployment insurance benefits totalled a seasonally adjusted 509,000 in the week ended Nov. 29, according to Labor Department data, in line with a shrinking labor market and economy.

New orders received by U.S. factories plummeted for a third straight month during October, according to a Commerce Department report on Thursday that underlined the drop in manufacturing output. [ID:nN04389503].

"We've been so badly battered by all this bad news that each piece of data is losing its punch," said Boris Schlossberg, director of currency research at GFT Forex. (Additional reporting by Wanfeng Zhou and Steven C. Johnson in New York and Veronica Brown in London, Editing by Chizu Nomiyama )

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