* World stocks down; US automakers seek more help
* Euro off 2-1/2 month lows, Eastern European worry remains
* British policymakers seek approval for quantitative easing
* European bond yields hit record lows, gold at 7-month high
(Adds quotes, updates prices)
By Veronica Brown
LONDON, Feb 18 (Reuters) - World share prices fell on
Wednesday, with investors seeking less risky assets, such as
government debt and gold as gloom about the global economic
outlook was heightened by U.S. automakers' woes.
On the foreign exchanges, sterling set two-week lows against
the dollar after minutes from the Bank of England's last meeting
showed policymakers voted to seek approval for unconventional
monetary easing measures [] while the euro held a
quarter cent above 2-1/2-month lows against the dollar.
The fate of U.S. automakers kept investor nerves on edge
after General Motors Corp <GM.N> and Chrysler LLC on Tuesday
asked for nearly $22 billion in additional U.S. government
loans. [].
The automakers' request came on the same day U.S. President
Barack Obama signed into law a $787 billion stimulus bill.
Germany's cabinet approved a law on Wednesday allowing it to
nationalise banks in the latest move to tackle the financial
crisis.
Analysts said investors were finding it hard to shake off
expectations more economic pain lay ahead.
"High level of economic uncertainty, continuing
deterioration in profit pictures for companies -- that's not
going to change anytime soon," said Darren Winder, equity
strategist at Cazenove.
Global share prices, as measured by MSCI's world equity
index <.MIWD00000PUS>, were down 0.4 percent on the day at
197.51, while the FTSEurofirst 300 index of leading European
shares fell 0.6 percent to 760.52 <>.
In Asia, Japan's Nikkei average <> fell 1.5 percent to
its lowest close in nearly four months and the MSCI index of
Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> fell 0.4
percent. U.S. stock futures were pointing to a slightly firmer
Wall Street open.
SAFETY BID
The euro's ability to rebound from its 2-1/2 month low of
$1.2557 <EUR=> was hampered as investors remained concerned by
this week's warning from credit ratings agency Moody's about the
impact that recession in eastern Europe could have on western
Europe.
"There is still a lot of concern about the financial
situation of some EMU states as well as concerns about the
exposure of some banks to central Europe," said Patrick Jacq,
interest rate strategist at BNP Paribas in France.
The benchmark euro zone two-year government bond yield fell
to a record low of 1.150 percent <EU2YT=RR>, below Tuesday's
trough of 1.154 percent. Investors were also keener to snap up
debt issued by Germany than other euro zone governments.
Spreads between the yields of German government debt and
those of Austria and Spain expanded to the widest since the
introduction of the euro [].
In the drive to support Britain's ailing economy, all nine
of the BoE's monetary policy committee voted to seek approval
for quantitative easing -- where central banks flood the banking
system with cash to stimulate lending.
Sterling traded at $1.4199 <GBP=>, having earlier fallen to
a two-week low at $1.4094.
Investors' scramble for the safest store of value sent gold
to a seven-month high price of $973.50 per troy ounce <XAU=>
even as other commodities gave way to demand worries stemming
from the deepening slowdown.
Holdings at the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD>, struck a record 1,008.80 tonnes
on Tuesday, up 2.3 percent from Friday. []
(Additional reporting by Dominic Lau and Ian Chua in London)
(Reporting by Veronica Brown; Editing by Jason Neely and
Swaha Pattanaik)
