LONDON, Nov 22: The dollar hit record lows against the euro on Thursday as growing concerns over the US economy cemented expectations of a near-term interest rate cut, while world stocks edged higher after this week’s sell-off.

Euro zone government bond futures ticked up in the absence of active US bond trade, with US markets closed for the Thanksgiving holiday. Oil steadied after knocking the door of $100 a barrel this week.

The Federal Reserve’s downgrade of the US growth outlook highlighted the vulnerability of the world’s biggest economy as defaults in sub-prime mortgages hit banks and investors fret about further possible write-downs as well as about rising inflation from surging oil, commodity and food prices.

The euro rose above $1.4870, bringing its gains against the dollar since January to more than 12 per cent. It also set fresh all-time highs against the European Central Bank’s trade-weighted basket of 24 currencies.

The dollar index, which measures the dollar’s value against a basket of major currencies, hit a record low of 74.916.

Interest rate futures markets are fully pricing in the chance of a 25 basis point US rate cut in December to 4.25 per cent after easing in September and October.

The MSCI main world equity index rose 0.24 per cent, while the FTSEurofirst 300 index was up 0.6 per cent, helped by gains in drugmakers and oil shares.

—Reuters