LONDON (AFP) — The euro fell to a two-year low under 1.25 dollars on Friday and the British pound sank to a six-year trough against the US unit as evidence mounted of slowing economic growth in Europe. In morning trade, the European single currency dived as low as 1.2497 dollars, which was last seen in October 2006, on expectations of eurozone interest rate cuts and slow economic growth amid the global financial crisis. It later stood at 1.2589, down from 1.2926 late in New York on Thursday. The euro also hit a six-year low of 113.81 yen. The pound sank to 1.5269 dollars, which was the lowest point since August 2002, after official data showed the country's economy contracted by 0.5 percent in the third quarter. Britain had already shown flat performance in the second quarter with zero growth. However, the economy is not officially in recession unless it reports two quarters running of negative economic growth, or contraction. "There's still no sign of any let up in the dollar's recent surge, especially in Europe where speculation is that further rate cuts will be seen from central banks before the year end is continuing to weigh on the likes of the pound and euro," said analyst Gary Thomson at CMC Markets. Dealers said there were few factors to support the euro amid rising fears of recession in Europe and expectations that the European Central Bank will cut interest rates. On the downside, the dollar tumbled to a 13-year low against the yen as investors sought refuge amid rising fears of a global recession, dealers said. The US currency sank to 92.80 yen, the lowest level since August 1995. It later pulled back slightly and stood at 95.11 yen in European trade, from 97.79 yen late in New York on Thursday. The yen often rises at times of financial turmoil as dealers unwind risky bets funded with cheap Japanese credit. "The best word to describe what's going on right now is panic," said Credit Suisse strategist Satoru Ogasawara. "When you don't know what will come next, you tend to flee to the safest place," Ogasawara said. The sharp rise in the yen in turn contributed to a major selloff on the Tokyo market which plunged 9.60 percent to a five-year low on Friday. In London morning trading on Friday, the euro changed hands at 1.2547 dollars against 1.2926 late Thursday, at 120.27 yen (125.73), 0.7984 pounds (0.7969) and 1.4844 Swiss francs (1.4983). The dollar stood at 95.11 yen (97.27) and 1.1739 Swiss francs (1.1589). The pound was at 1.5839 dollars (1.6216). On the London Bullion Market, the price of gold fell to 694.62 dollars an ounce from 720 dollars late on Thursday.

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