The pound fell the most in six years against the euro, declining to a record, after the Federal Reserve cut its discount rate and JPMorgan Chase & Co. bought Bear Stearns Cos. Gilts soared.

The pound also slipped to a three-year low against the yen and the lowest level in 12 years versus the Swiss franc as European stocks slumped, prompting investors to pare holdings of higher-yielding currencies. The Fed cut the rate on direct loans to banks by a quarter-point to 3.25 percent to shore up dwindling confidence, its first weekend emergency action since 1979.

``Sterling is coming under a lot of pressure, triggered by the U.S. side of the story, with what's happened with Bear Stearns and the Fed action,'' said Ian Stannard, a currency strategist in London at BNP Paribas SA, France's biggest bank. ``Equity markets are down and all the yen crosses are under pressure today, all the high-yielders. Pound-yen was still very much a carry-trade currency.''

The pound dropped to 79.12 pence per euro, the lowest level since the common currency's 1999 inception, and was at 78.29 pence by 9:20 a.m. in London, from 77.58 pence at the end of last week. It fell to $2.0184, from $2.0202.

Britain's currency fell to 194.99 yen, the lowest level since January 2005, from 200.18 yen on March 14, and traded at the weakest since October 1996 versus the Swiss franc, at 1.9777, from 2.0166.

Stocks in Europe and Asia tumbled after the U.S. central bank said yesterday it will also provide JPMorgan with as much as $30 billion to fund the purchase of Bear Stearns, Wall Street's fifth-biggest lender, and give loans to the 20 firms that buy Treasury securities directly from it.

Carry Trade

The U.K.'s FTSE 100 Index dropped 2.6 percent to a two-month low, while the Dow Jones Stoxx 600 Index, a benchmark for Europe, declined 3.4 percent.

The decline in stocks around the world encouraged investors to sell higher-yielding currencies, such as the pound, that they'd bought using low interest-rate loans in yen and Swiss francs. These so-called carry trade investors borrow cheaply and invest the proceeds into higher-yielding currencies, earning the spread between the two interest rates. The trades are considered risky because currency-market fluctuations can wipe out profit.

The Bank of England said today Europe's second-biggest economy was facing ``difficult conditions'' that may slow growth.

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