By Natsuko Waki LONDON, Dec 17 (Reuters) - The dollar hit a 2-1/2 month low versus the euro and fell towards a recent 13-year low against the yen on Wednesday after the Federal Reserve slashed interest rates to near zero and pledged more action. Article Controls EMAIL REPRINT NEWSLETTER COMMENTS SHARE YAHOO! BUZZ European stocks fell while U.S. stock futures were pointing to a weaker open on Wall Street. Sterling tumbled on weak UK data and expectations for deep interest rate cuts in Britain. Government debt prices shot up as investors expect a prolonged period of low interest rates, pushing the benchmark 10-year U.S. Treasury yield to fresh five-decade lows. In a surprisingly aggressive move, the Fed cut its target for the benchmark rate to zero to 0.25 percent from 1 percent on Tuesday, virtually exhausting traditional measures to battle the year-long recession. It also promised to take more action by extending its quantitative easing measures. 'The Fed had an explicit commitment that they will leave interest rates very low for an extended period and that's quite negative for the dollar because of relative interest rates,' said Adarsh Sinha, currency strategist at Barclays (nyse: BCS - news - people ) Capital. The MSCI world equity index rose 1 percent, trimming gains after hitting its highest level since Nov. 11. The FTSEurofirst 300 index of leading European shares fell 0.6 percent. Emerging stocks rose 2.3 percent. U.S. stock futures were down around 1.7 percent.

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