Sterling hit a record low on a trade-weighted basis and a 6-1/2 year low against the dollar on Tuesday, nagged by a grim outlook for the economy in thin trade as the year draws to a close.

The yen climbed towards an all-time high against the Australian dollar on Monday as investors kept dumping risky positions and drove Tokyo shares to a 26-year low, overshadowing a G7 warning about excessive yen volatility.

The Group of Seven rich nations tried to cool a rally in the yen with a warning against volatility on Monday as Tokyo scrambled to shield its largest banks from a spiralling global financial crisis.