Aussie subdued by gloomy growth outlook, bills firm

SYDNEY, Nov 7 (Reuters) - The Australian dollar fell further from recent two-weeks highs on Friday, with deepening concerns about a global economic slowdown keeping investors away from higher-yielding currencies and riskier assets. * The International Monetary Fund cut its 2009 global economic growth to 2.2 percent, from 3 percent forecast in October. It expects the U.S. economy to contract by 0.7 percent next year, while the euro zone is expected to shrink by 0.5 percent, hurt by the financial market turmoil. * By 9:40 a.m. (2240 GMT), the Aussie slipped to $0.6635, from $0.6724 late here on Thursday and nearly four cents below a two-week peak of $0.7015 on Nov. 4. * Commodities fell sharply along with stock markets after another raft of U.S. data provided further evidence of a looming recession in the world's largest economy. Those concerns led jittery investors to unwind leveraged carry trades. * As a result, the Aussie fell to 64.67 yen from 65.63 yen late here on Thursday. * Central banks in Europe stepped in to support their economies by cutting rates. The Bank of England slashed rates by a 150 basis points, but the European Central Bank disappointed investors with only a 50 basis point reduction. * Investors were hoping for a more aggressive cut by the ECB, though President Jean-Claude Trichet softened the blow somewhat saying he did not rule out further cuts. The weaker euro also pulled down on the Aussie. * The Swiss National Bank cut interest rates and its chairman said the central bank expects the economy to shrink next year. . For a wrapup of the latest global economic developments, see. * Australian bill futures extended recent gains, with investors pricing in chances of a 75 basis-point cut in December by the Reserve Bank of Australia (RBA). The central bank cut the cash rate by a larger-than-expected 75 basis points to 5.25 percent earlier this week after a 100 basis point cut in October. * Australian bond futures were firmer, especially at the shorter end, helped by safe-haven inflows. U.S. Treasuries also rose as stock market losses drove investors to the relative safety of government bonds. * Three-year bond futures rose 0.055 points to 95.885, while the 10-year futures contract slipped 0.1 points to 94.84. (Reporting by Anirban Nag; Editing by James Thornhill) Keywords: MARKETS AUSTRALIA DOLLAR/BONDS ([e-mail] ; [phone]; Reuters Messaging: [e-mail] ) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.