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By Miho Yoshikawa

TOKYO, March 17 (Reuters) - Gold prices shot up more than 3 percent to fresh record highs as investors stepped up buying of the yellow metal, whose lustre has increased due to the dollar's weakness and deepening U.S. financial woes.

JPMorgan Chase & Co (JPM.N: Quote, Profile , Research) said on Sunday it would acquire stricken rival Bear Stearns (BSC.N: Quote, Profile , Research) for just $2 a share in an all-stock deal that values the U.S. investment bank at about $236 million. [ID:nN16640873]

The news sent the dollar tumbling to a record low against the euro <EUR=> as investors worried that there would be more casualties in the widening U.S. financial crisis.

The Fed cut its discount rate on Sunday and opened up discount window lending to major investment banks -- a tool not used since the Great Depression -- in a sign of its deep concern over the current crisis.

"This morning's moves by the Fed clearly tell how serious the situation is in the United States. Gold is drawing a lot of safe-haven demand as you can't buy stocks or currencies because of this volatility," said Shuji Sugata, manager at Mitsubishi Corp Futures and Securities Ltd.

Gold's attraction as an alternative investment has helped boost the precious metal's price by more than 20 percent this year alone, as it hit successive record highs along the way. Continued...

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