--Euro, pound come under selling pressure as data confirm slowing growth --Political squabbling intensifies as Europe lurches toward new debt crisis phase --Central bank meetings in developed economies to be in focus this week By Eva Szalay Of DOW JONES NEWSWIRES LONDON -(Dow Jones)- The euro and the pound started the week in a downbeat mood Monday as data again showed economic growth in the euro zone and U.K. slowing and as the political squabbles intensified over Europe's unresolved debt crisis. The pessimistic tone briefly lifted at the start of London trading hours when a raft of European service-sector purchasing managers' indexes for August came in slightly higher than expected. But the mood turned sour again as traders digested broader economic data which showed growth in the euro zone slowed to a two-year low, adding to the shaky global economic backdrop in the wake of Friday's poor U.S. jobs numbers. The euro traded as high as $1.4162 but quickly turned lower to trade at the day's low at $1.4113. "[The] GDP weighted average of G10 manufacturing PMIs have now fallen below the crucial 50 level which separates expansion and contraction," said Morgan Stanley in a note to clients. "This is consistent with our economists' view of a significant slowdown taking hold in the developed world." European shares were also weaker, while the cost of insurance against default by European financial institutions hit a record high. Friday's breakdown in talks between Greek officials and a visiting troika of international experts further undermined the euro, as did news German Chancellor Angela Merkel's political woes are intensifying after her party suffered a beating in local elections. The result may further hinder efforts to implement changes to the European Financial Stability Facility, with Germany's constitutional court due to rule Wednesday on the legality of Greece's latest rescue package. "The defeat of Angela Merkel's party in regional elections over the weekend simply adds to the sense that saving the euro is going to be made more difficult by opposition from within Germany," said Sebastien Galy of Societe Generale. Sterling suffered heavy losses after data showed that the U.K.'s dominant services sector posted its sharpest slowdown for more than a decade. Further weighing on the currency was a note from Goldman Sachs calling for the Bank of England to engage in another round of asset purchases and saying that it does not expect a U.K. interest rate increase until 2013. The upcoming data calendar lacks any fresh drivers as U.S. markets are shut for Labor Day celebrations. Interest rate decisions are due later in the week from the European Central Bank, Reserve Bank of Australia and Bank of England, while President Obama will talk about stimulating the U.S. jobs market on Thursday. At 1045 GMT, the euro was at $1.4128 from $1.4205 late Friday. The dollar was at Y76.85 from Y76.82, while the euro was at Y108.56 from Y109.12. The U.K. pound was at $1.6124 from $1.6218. The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at about 75.038 from 74.706. - By Eva Szalay, Dow Jones Newswires; 44 20 7842 9305; (eva.szalay@ dowjones.com)

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