By Agnes Lovasz Oct. 28 (Bloomberg) -- The pound snapped a seven-day losing streak against the dollar on speculation rising stock markets will increase demand for the British currency. The pound also gained versus the yen and Britain's government bonds slid as stock-market gains sapped demand for the safest assets. The FTSE 100 Index, a U.K. equity benchmark, climbed 1.5 percent and the cost of protecting European company bonds from default fell, credit-default swaps showed. The pound's relative strength index, a chart used to indicate price direction, also signaled it was poised to rebound. ``There's been a really strong correlation between currencies and equities lately,'' said John Hydeskov, a senior analyst in Copenhagen at Danske Bank A/S, Denmark's biggest bank. ``The pound has been hit hard by this continued deleveraging. The gains in equities today are quite strong, so risk sentiment keeps things in balance.'' The pound was at $1.5586 as of 9:54 a.m. in London, from $1.5552 yesterday. Against the euro, the currency climbed to 80.16, from 80.33. It rose to 147.33 yen, from 144.29 yen. The currency's 14-day relative-strength index versus the dollar, a technical indicator some traders use to forecast price direction, was at 18.7 today, below the 30 threshold that typically signals a rebound. Gilts Fall The pound traded near the weakest in five years against the dollar yesterday and close to its all-time low versus the euro after Hometrack Ltd. said house prices dropped this month by the most since at least 2001. Chancellor of the Exchequer Alistair Darling will say in a speech this week that the economic crisis will be deeper and longer-lasting than first predicted, the Sunday Times reported two days ago. U.K. government notes declined, with the yield on the 10- year gilt rising 7 basis points to 4.47 percent. The 5 percent security due March 2018 fell 0.53, or 5.3 pounds per 1,000-pound ($1,573) face amount, to 104.20. The yield on the two-year note rose 7 basis points to 3.19 percent. Bond yields move inversely to prices. The U.K. government plans to sell 1 billion pounds of 1.25 percent inflation-linked bonds at an auction today. The notes mature in 2032. To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net

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