Euro on track for record high, global stocks pressured

By Veronica Brown

LONDON (Reuters) - The euro moved towards record highs versus the dollar on Friday, boosted by ECB policymakers' comments on inflation, while economic worries weighed on stock markets as they approached the end of a volatile quarter.

The single European currency rose as high as $1.5839, within shouting distance of last week's record $1.5904. Gains were later trimmed however after data showing U.S. personal income rose more than expected in February.

Overall sentiment towards the U.S. economy and the dollar remained weak however as the ailing U.S. economy teetered on the brink of recession as contagion spread from problems in the domestic housing market and global credit crunch.

"Comments from the Fed overnight continue to paint a grim picture of the situation in the U.S. and there's an increasing risk of the U.S. moving into a recession," said Ian Stannard, senior foreign exchange strategist at BNP Paribas.

The euro's fortunes were boosted after European Central Bank Governing Council member Axel Weber said price pressures were alarmingly high. ECB executive board member Jurgen Stark said there was no reason to believe inflation has been brought under control.

The ECB's focus on fighting inflation has made it more tolerant to a strengthening currency and is in sharp contrast to the stance of the U.S. Federal Reserve, which has slashed rates by 300 basis points in the last seven months to boost growth.

STOCKS PRESSURED

European shares slipped in choppy trade with bank shares dropping on fears of further fallout from the ongoing credit squeeze.