* Sterling pressured as BoE announces quantitative easing
* Dollar broadly stronger; 4-month high vs yen at 99.67 yen
* Euro pares losses after ECB cuts rates to 1.5 percent
* Euro zone Q4 GDP confirmed at -1.5 percent q/q
(Recasts, adds quotes, updates prices after BoE, ECB)
By Kirsten Donovan
LONDON, March 5 (Reuters) - Sterling fell against the dollar on Thursday after the Bank of England cut rates to a record low and announced an asset buying programme, while the dollar remained broadly stronger on fears over the economic outlook.
The euro pared losses against the dollar after the European Central Bank cut rates by 50 basis points to 1.5 percent as expected to shore up the ailing euro zone economy.
Traders are now looking for hints of more euro zone rate cuts, as well as the prospect of unconventional measures when ECB President Jean-Claude Trichet speaks at 1330 GMT.
Sterling extended losses after the BoE said it was launching a 75 billion pound programme of asset purchases -- so called quantitative easing -- to complement the cut in its base rate to 0.5 percent.
The Bank said the likely majority of purchases over the next three-months would be medium- and long-term maturity gilts, sending yields on such paper sharply lower.
"Markets are a little disappointed that the 75 billion pounds is focused towards the long-end of the gilt curve and not the corporate sector per se," said Rabobank strategist Jeremy Stretch.
"Sterling will probably remain under a bit of pressure...obviously we'll see continued issuance of money supply so there will be more sterling sloshing around in the system," he added.
At 1250 GMT, sterling was 0.66 percent lower against the dollar at $1.4070.
European stock markets were down over 2 percent with U.S. futures pointing to a lower open on Wall Street, boosting the flow of funds into perceived safer assets such as the dollar.
The dollar retained its broad strength, extending gains against a basket of currencies after auto giant General Motors warned it had substantial doubts about its ability to continue as a going concern if it fails to stem its losses and generate cash. "The dollar has no shortage of supporters as the global economic malaise continues to build," said James Hughes, a market analyst at CMC Markets, in a note.
The greenback also rose to a fresh four-month high against the yen on worries over a deteriorating economy and deepening political uncertainty in Japan.
The dollar index was up 0.71 percent at 89.115, hovering near three-year highs.
OPTIONS OPEN
The ECB is also expected to slash its 2009 and 2010 economic forecasts to reflect the rapid pace of deterioration in the euro zone.
The euro was down 0.6 percent at $1.2559 and flat at 89.20 pence.
ECB Governing Council members Axel Weber and Christian Noyer said on Tuesday the central bank was considering all options to extend its monetary toolbox further.
Data on Tuesday showed the euro zone economy contracted by 1.5 percent in the fourth quarter of 2008, unchanged from a preliminary estimate. It was slightly worse on a year-on-year basis, down 1.3 percent compared with an initial -1.2 percent.
The dollar rose 0.3 percent to 99.67, its highest in four months, before settling back at 99.30.
Government data on Thursday showed Japanese firms' capital spending tumbled 17.3 percent in October-December from the same period a year earlier, pointing to a downward revision of gross domestic product for the quarter next week.
"Dollar/yen continues to ratchet higher toward the 100 yen level and should break through this mark before the end of the week," said Daragh Maher, deputy head of global foreign exchange research at Calyon, pointing to the economic backdrop.
The Swedish crown extended losses against the euro after one of the country's central bankers said the currency's weakness could be more prolonged and more rate cuts may be needed.