LONDON (Reuters) - Investors rushed yesterday to bet on an interest rate cut from the Bank of England as fresh evidence emerged of slowing growth, falling house prices and tumbling consumer confidence.

Until recently, most economists had expected rates to stay on hold this month but the weakness of the latest data has prompted several banks, including Barclays, Merrill Lynch and RBC, to switch sides.

The Bank announces its verdict today.

Sterling fell to its lowest against the euro in more than four years yesterday and money markets moved to price in a more than 50 percent chance of a rate cut.

"A recent stream of markedly softer data and survey evidence relating to the services sector, consumer confidence and the housing market has given a decisive advantage to the rate cut case," said Howard Archer, chief UK economist at Global Insight. Archer said he had also changed his mind and was expecting a rate cut.

As Bank policymakers kicked off their two-day meeting, they had three unequivocally gloomy surveys to digest.

Britain's biggest mortgage lender, Halifax, reported house prices fell in November for a third month running — the first time this has happened since 1995.

A survey of purchasing managers showed the UK's service sector grew at its slowest pace since 2003, with financial sector firms recording an outright contraction.

And a Nationwide survey showed consumer confidence fell last month at its sharpest rate in more than three years.

Unlike the US Federal Reserve, which has already cut interest rates twice since credit markets went into a spasm this summer, the Bank of England has left rates at a six-year high of 5.75 percent since July.

Canada's central bank cut interest rates on Tuesday — a decision that had also been on a knife-edge — and the Fed is expected to cut rates again next week, possibly by a hefty 50 basis points.

With little sign of the credit squeeze loosening its grip and the real economy starting to suffer, the BoE is not expected to hold out for much longer.

Two of the nine Monetary Policy Committee members voted to cut rates last month and its latest inflation projections suggest it has scope to cut rates twice over the coming year.

Those arguing the BoE will hold fire until next year rest their case on rising price pressures. Oil prices surged to nearly $100 a barrel last month, a factor that has still to work its way through the inflation pipeline.

Yesterday's service sector survey showed rises in both input and output prices and a survey by the Confederation of British Industry last week showed retailers expected to raise prices at the fastest pace in nine years.

Still, a slowing economy means inflation pressures are unlikely to build for long. "Falling house prices, declining consumer confidence and a sharp weakening in service sector activity: all ingredients are in place for a rate cut tomorrow," said Audrey Childe-Freeman at CIBC World Markets.