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The Bank of England cut interest rates for the third time in five months to cushion the economy from the global credit squeeze, despite persistent worries about rising inflation. The central bank said the quarter percentage point reduction in its main rate to 5.0 percent was justified even though inflation was likely to spike in the short term. But the British Chamber of Commerce says the cut is not enough, and the reduction is unlikely to be passed on to borrowers. Two big mortgage lenders raised their lending rates hours before the cut was announced. //// Meanwhile, the European Central Bank kept interest rates at 4.0 percent, in line with economists' expectations that surging inflation twinned with a murky economic outlook would prompt the ECB to stay put for the 10th month in a row. SOUNDBITE: European Central Bank President, Jean-Claude Trichet, saying (English) "The level of uncertainty resulting from the turmoil in financial markets remains unusually high and tensions may last longer than initially expected. Against this background, we emphasise that maintaining price stability in the medium term is our primary objective." The rate cut by the Bank of England led to sterling sinking to record lows against the euro and the ECB hold saw the euro reaching record highs against the dollar. /// Stocks extended losses as concerns about the banking sector resurfaced after Lehman Brothers liquidated three investment funds and took a balance sheet hit. Oil reached another record peak, highlighting inflation pressures. The FTSEurofirst 300 was down over one and a half percent. //// Desperate Alitalia employees decided to make a splash by throwing a model aeroplane into one of Rome's most famous landmarks, the Trevi fountain. Exhausted after months of negotiations regarding the future of Alitalia, many workers have become frustrated with their unions who they feel are also blocking any chance to salvage their jobs. (SOUNDBITE) (Italian) DEMONSTRATOR PASQUALE LEON SAYING: "The Alitalia model in the Trevi fountain is a symbol for us that they are letting Alitalia sink for good. The sale that they tried to do with Air France is yet another act to give away a piece of Italy to foreigners." Italy's government has sought to convince Alitalia's unions that a takeover by Air France-KLM was the ailing carrier's only option, telling labour groups they had a last chance to agree to a deal. Air France-KLM walked away from its takeover of Alitalia last week over union opposition, but later suggested its decision to back out was not final. Stefanie McIntyre, Reuters COMPANIES MENTIONED: SYMBOLS: