* Sterling hits highest since Nov 2008 versus euro * Pound's relative safe haven status draws investors * Fed minutes in focus for U.S. QE hints By Nia Williams LONDON, July 9 (Reuters) - Sterling steadied after hitting a 3-1/2 year high against a broadly weaker euro on Monday as investors concerned about the euro zone debt crisis and slowing global growth bought the pound as safer alternative to the single currency. In the absence of any UK data releases trade in the pound was subdued, prompting euro/sterling to track moves in the euro against the dollar, which hit which hit a two-year low on Monday. Market players were looking ahead to a meeting of euro zone financial leaders later in the session, with many concerned the meeting may do little more than highlight the limitations of measures to help indebted states and banks agreed at a summit last month. Rising Spanish and Italian bond yields added to the cautious market sentiment and kept the euro on the back foot. "Euro/sterling is going to remain offered while euro/dollar remains weak. The market is being particularly bleak at the moment," said Gavin Friend, currency analyst at National Australia Bank. The euro hit a low of 79.06 pence against the pound during Asian trade, its weakest level since November 2008, before paring losses to trade down 0.1 percent at 79.19 pence. Michael Hewson, senior market analyst at CMC Markets, said the next long-term target for the euro was 77.84 pence, the 61.8 percent Fibonacci retracement of the rally from 2007 lows at 65.35 pence to the 2008 highs at 98.05 pence. The pound looked set to climb further against the euro despite the Bank of England opting to pump another 50 billion pounds into the UK economy to stimulate growth last week. Some analysts said policymakers may opt for even more stimulus later in the year. "The BoE has timed it nicely (to do more) for the November inflation report. This should keep sterling on the back foot but the trump card is euro weakness at the moment and sterling will outperform," said National Australia Bank's Friend. A rate cut by the European Central Bank last week also dampened the impact of looser BoE monetary policy, which is usually considered currency negative as it increases the supply of pounds in the system. FED MINUTES EYED Sterling edged up 0.2 percent against the dollar to $1.5520. It held above a four-week low of $1.5461 hit on Friday after weak U.S. non-farm payrolls data heightened concerns about lacklustre growth and boosted demand for the safe haven greenback. Some analysts said the pound versus the dollar, also known as cable, could rise if market players increase bets that poor U.S. data will prompt the Federal Reserve to also announce another round of QE. Minutes from the Fed's June meeting, to be released on Wednesday, will be scrutinised for any hints of further easing. "It will give a clue as to the frame of mind of policy setters, and give an indication of the likelihood of more QE before the end of the year," said Jane Foley, senior currency strategist at Rabobank. "If they are extremely dovish it could support cable, but then again a gloomy set of rhetoric could undermine risk appetite." Sterling investors were also looking ahead to UK industrial output data on Tuesday, expected to reinforce signs of faltering economic growth. Analysts said a weak reading was unlikely to knock the pound significantly as softness in the economy is already priced in. (Additional reporting by Michael Szabo; Editing by Toby Chopra)

Source