UK interest rates cut by 1 percent

The Bank of England has cut interest rates from 3% to 2% - the lowest level for more 50 years.

The Bank's announcement, which followed last month's 1.5 percentage point cut, came as new figures showed UK house prices dropped at their fastest monthly rate for 16 years in November and new car sales were down 37 percent.

Europe's Central Bank also cut its main interest rate by 75 basis points to 2.5 per cent.

Bank of England Governor Mervyn King discussed the possibility of lowering the U.K. rate to zero for the first time on Nov. 25 and said the biggest challenge he faces is renewing the flow of credit in the economy.

New statistics show that the eurozone's economy shrank by 0.2 of a per cent in the July to September period.