* Sterling at highest level vs euro since Oct. 2008
* Concerns about Spain, Greece fuel safe haven demand
* Pound struggles vs dollar, down 0.5 percent
By Michael Szabo
LONDON, July 23 Sterling climbed to a more than
3-1/2 year high against a tumbling euro on Monday as worries
over Spain and Greece's debt problems drove investors to the
relatively safe haven of the UK currency.
Spain's borrowing costs jumped to euro-era highs after media
reports that six more of the country's regions could follow in
Valencia's footsteps and seek central government aid.
Investors were also increasingly worried about Greece's
future in the euro zone, following a report in German magazine
"Der Spiegel" that the International Monetary Fund may not take
part in any additional financing for the country.
Greek Prime Minister Antonis Samaras said the country was in
a 1930s-style "Great Depression", while German economy minister
Philipp Roesler said he did not expect Greece to fulfill its
requirements for a bailout.
International lenders will meet in Athens on Tuesday to
discuss the terms of further rescue payments.
The euro slid against all major currencies, falling to 77.56
pence against the pound, the lowest level since
Analysts said investor flows into safer havens including the
dollar and the yen remained heavy, which in turn weighed on the
pound against those two currencies.
The pound was last down 0.5 percent on the day at $1.5539
, its lowest level in a week, and hit a seven-week low
of 121.29 yen.
Analysts said sterling could be subject to further weakness
with the publication of preliminary second quarter UK GDP
figures on Wednesday, forecast to show a 0.2 percent
quarter-on-quarter slide and extending the country's recession
into a third quarter.
"Market participants find that every piece of negative euro
zone news gives yet another reason to sell the euro (even if
already known), yet poor UK data is willfully ignored," said
Commerzbank in a note to clients.
The bank's analysts highlighted data released last week
including poorer-than-expected retail sales for June and public
sector borrowing figures that were above expectations.