The pound strengthened as European equities fell, boosting investor demand for a haven from the deepening euro-region sovereign crisis. Sterling appreciated versus most all but two of its 16 major peers tracked by Bloomberg, rising most against the Korean won, and gained for a second day against the dollar. The British currency was still set for its biggest weekly drop against the dollar in almost two months. The Stoxx Europe 600 Index fell 0.2 percent, while the FTSE 100 Index (UKX) declined for a fifth day, dropping 0.5 percent. U.K. 10-year gilts headed for a third consecutive weekly gain. The pound was 0.6 percent stronger at $1.5842 at 10:13 a.m. London time. It has weakened 1.4 percent against the dollar this week, the biggest drop since the five-day period ended Sept. 23. Sterling was little changed at 85.48 pence per euro, from 85.59 pence at the end of last week. The pound has gained 0.3 percent in the past week and 2.3 percent in the past month against a basket of nine developed- market peers, according to Bloomberg Correlation-Weighted Indexes. The 10-year gilt yield was little changed at 2.23 percent, after dropping as much as six basis points to 2.17 percent. The two-year yield was at 0.50 percent. To contact the reporter on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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