March 14 (Bloomberg) -- The Swiss franc rose to parity against the dollar for the first time after Bear Stearns Cos. was forced to seek emergency funding, fueling concern the U.S. is sliding into a recession and prompting investors to sell higher-yielding assets funded in Switzerland.

The franc has gained versus all 16 most-active currencies this year as the U.S. subprime-mortgage crisis led investors to exit so-called carry trades amid a slump in stocks. The currency has also benefited from speculation the Swiss National Bank will cut borrowing costs this year less than the Federal Reserve as the economy escapes the worst of the global squeeze on credit.

The franc ``enjoys the best of both worlds: the funding- currency status and a higher yield,'' said Peter Frank, a currency strategist in London at Societe Generale SA, which correctly forecast the franc would reach parity this quarter. ``It's got the safe haven bid in times of financial distress. I see a fairly significant appreciation coming.''

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Against the dollar, the franc climbed as high as 0.9988 and was at 1.0038 by 3:25 p.m. in Zurich, from 1.0093 yesterday. The franc may gain to 0.96 in coming months, Frank said. It also traded at 1.5693 per euro, from 1.5787 yesterday.

Concern that losses linked to the collapse of the U.S. housing market will undermine global economic growth have fueled the franc's 13 percent gain against the dollar this year, the most of any of the 16 major currencies. Financial firms have announced about $190 billion of writedowns since the start of 2007. Swiss central bank Vice-President Philipp Hildebrand said on March 3 the credit crisis hasn't yet run its course.

Fed Help

Bear Stearns obtained emergency funding from JPMorgan Chase & Co. and the New York Federal Reserve as the securities firm said its cash position had ``significantly deteriorated.'' The New York Fed will ``provide non-recourse, back-to-back'' financing for up to 28 days, JPMorgan said in a statement today. Bear Stearns said it was in talks with the New York-based bank ``regarding permanent funding or other alternatives.''

Switzerland's currency is typically favored by investors during times of international tension because of the stability of the country's government and economy. It gained almost 3 percent against the dollar after the Sept. 11, 2001, terrorist attacks.

The franc ``has always been considered a safe-haven currency and the SNB has a very high degree of credibility,'' said Tom Fitzpatrick, the global head of currency strategy in New York at Citigroup Inc., the biggest U.S. bank by assets. ``When financial concerns become elevated, the franc tends to do well. And it doesn't return so much less than the dollar anymore.''

The world economy will expand 4.1 percent this year, down from 4.9 percent in 2007, the International Monetary Fund said Jan. 29, cutting its forecast from the 4.4 percent rate projected in October.

`Well Supported'

``Strong safe-haven demand is keeping the currency well supported,'' a team of strategists led by London-based Mansoor Mohi-uddin at UBS AG, the world's second-largest currency trader, wrote in a report March 3. ``Downside revisions to global growth will help the currency consolidate its gains.'' Writedowns may top $600 billion, UBS said last month.

The franc was little changed against the dollar through the first half of last year, before global financial markets began tumbling in August as money-market rates surged. It ended the year 7.6 percent stronger.

`Historic Moment'

``The rise to parity with the dollar is an historic moment,'' said Janwillem Acket, group chief economist at Julius Baer Holding AG in Zurich. ``This is a psychological barrier for many people.'' The central bank will keep borrowing costs on hold this year, according to Acket.

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