Lose is a verb only, meaning variously “to mislay,” “to fail to win,” etc., as in Don’t lose [not loose] possession of the ball, or you’ll lose the game. Loose is an adjective, adverb, and verb. As an adjective it means variously “not firmly fixed,” “not restrained,” etc., as in loose [not lose] floorboards;loose [not lose] dogs running through the alley. As an adverb it means “freely,” as in dogs running loose [not lose]. As a verb it means variously “to untie,” “to make less tight,” and “to fire a projectile,” as in loosed her grip;loosed the taut anchor line;loosed a volley of arrows.
<taken from Microsoft Encarta Dictionary>
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