FOREX-Euro, pound arrest losses; c.banks deliver big cuts

* Euro, sterling sentiment shaky in race to cut rates

* ECB cuts rates 75 bps, BoE by 100 bps

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

(Adds quotes, updates prices)

By Veronica Brown

LONDON, Dec 4 (Reuters) - The euro and sterling arrested early falls against the dollar on Thursday, but remained shaky as euro area and UK interest rates were lowered in the global central bank drive to ward off a prolonged global slowdown.

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

A surprisingly big 175 basis point cut in Swedish borrowing costs earlier [ID:nWEA7995] and a swingeing 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 75 basis point cut to 2.50 percent.

The BoE opted to cut its borrowing costs by 100 basis points to 2 percent, slightly disappointing some in the market who had speculated on similar move 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 cuts 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.

At 1317 GMT, the euro had fallen 0.7 percent against the dollar to $1.2632, trimming earlier losses, while the pound was down 0.7 percent to $1.4653, having earlier hit a 6-3/4 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 0.6 percent at 92.80 yen, while the euro fell 1.2 percent to 117.12 yen .

ECONOMIC WOES WEIGH

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.

Data on Wednesday showed the U.S. service sector posting its worst slump on record while U.S. private employers cut 250,000 jobs in November, the biggest number in seven years. [ID:nN03311018].

"We have entered the eye of the storm in terms of terrible data, with yesterday's ISM report suggesting U.S. nonfarm payroll losses tomorrow in excess of 500,000. This only serves to increase risk aversion," ING currency strategist Tom Levinson said in a note to clients.

(Reporting by Veronica Brown; Editing by Victoria Main)

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