Sterling falls on global economy fears

* Sterling falls vs dollar, euro as investors shun risk

* Global worries hit shrs; Stg at 19-mth low vs Swiss franc

* Sterling fails to benefit as UK mortgage approvals improve

LONDON, Aug 31 (Reuters) - Sterling fell against the dollar and the euro on Tuesday as mounting concerns about the global economic outlook kept investors away from perceived higher-risk currencies.

Sterling briefly pared losses versus the dollar after figures showed a gain in mortgage approvals and consumer credit [ID:nBELVJE610] but dipped back again after failing to sustain a break above its 200 day moving average around $1.5440.

"The numbers were slightly better than expected, but there is not much conviction in any sterling rallies at the moment," said Adam Cole, global head of currency strategy at RBC Capital Markets.

At 1028 GMT, sterling was down 0.3 percent at $1.5414, below its 200-day moving average and hovering close to a five-week low of $1.5373.

Sterling also fell against the euro EURGBP=D4, with the single currency up 0.6 percent, hitting a high of 82.37 pence, its strongest in 11 days. Some traders cited talk of month-end euro/sterling buying helping to lift the euro.

Analysts said sterling was being driven by wider developments on financial markets, with concern that a flagging U.S. economy will hamper the global recovery weighing on stocks and lifting the likes of the dollar, yen and Swiss franc.

"Today sterling is likely to be driven by slight risk aversion and month-end flows," said Paul Robson, currency strategist at RBS.

"We are seeing the dollar rise against most currencies".

Heightened risk aversion caused UK and European shares .FTSE .FTEU3 to fall nearly 1 percent and pushed the pound down sharply against the yen GBPJPY=R and Swiss franc GBPCHF=R, with sterling hitting a 19-month low versus the Swiss currency.

BETTER DATA

Data has suggested that the UK economy has performed well recently, with figures on Friday showing an upward revision to already solid second-quarter gross domestic product growth.

GfK/NOP's consumer confidence measure, released early on Tuesday, unexpectedly improved. [ID:nLDE67Q11Q] Another survey showed inflation expectations rose, keeping alive concerns among some Bank of England policymakers about rising price pressures. [ID:nNLAH00678]

Market participants were wary, however, with the economy vulnerable as public spending is slashed and if the U.S. slowdown gathers pace, while the signals on some areas of the UK economy, especially the housing market, have been patchy.

Bank of England data showed mortgage approvals numbered 48,722 in July, just above an upwardly revised 48,562 in June. However, they were still well below November's 21-month peak of 59,117, while mortgage lending was much weaker than expected -- at just 86 million pounds versus 700 million forecast.

"Although the Bank of England somewhat surprisingly reported that mortgage approvals edged up in July, the fact remains that they were still at a very low level and point to ongoing muted housing market activity," said Howard Archer, Chief European & UK Economist at IHS Global Insight. (Reporting by Jessica Mortimer)