UPDATE 3-Market speculators won't sway UK policy -Brown

(Adds fresh Brown quote, details)

By Peter Griffiths and Matt Falloon

LONDON, Jan 23 (Reuters) - British economic policy will not be influenced by speculators on financial markets, Prime Minister Gordon Brown said on Friday, as concerns intensify over sharp falls in sterling and the worsening state of the economy.

The speed at which the economy has gone into reverse -- it shrank at its fastest pace since 1980 in the three months to December -- and worries over how well the government's response is working have spooked financial markets in recent days.

Prominent international investor Jim Rogers said this week the pound was "finished" and people should avoid investing in Britain. Sterling hit a 23-year low against the dollar and a record low against the yen on Friday.

"If you think that we are going to build our policy around the comments of a few speculators who want to make money out of Britain, then you are very, very wrong indeed," Brown said.

For the time being, British policymakers seem content to let the pound drop in value because it provides a much-needed competitive edge for British exporters at a time of slowing global demand. It is hoped that will give the economy a boost.

Bank of England Governor Mervyn King reiterated that sentiment in a speech earlier this week.

But the fall in sterling is causing friction in Europe -- Britain's main trading partner -- and at home, where the opposition Conservatives have pounced on it as proof of global disapproval of the ruling Labour party's policies.

IMF WARNING

Conservative leader David Cameron has warned that Brown's decision to borrow billions to try to kick start the economy has left Britain "running the risk" of being forced to go to the International Monetary Fund for emergency help.

It was a Labour government that last took such action in 1976.

"I think it's right to warn about that, I think it's a responsible thing to do," Cameron told reporters. "I don't want the government to make it worse in their forthcoming March budget."

Brown described such comments as "irresponsible behaviour". Ratings agency Moody's said on Thursday Britain's sovereign debt rating was no weaker than any other nation with the top triple-A grade, despite its fiscal stimulus and bank bailout measures.

Official data showed Britain had entered its first recession since the early 1990s. The economy shrank 1.5 percent in the three months to December and is expected to continue contracting for some time to come.