(Adds comments, details, sterling move)
By Helen Reid
LONDON, May 22 (Reuters) - Shares in Britain's housebuilders and
retailers tumbled and sterling slid on Wednesday after multiple media
reported rumours Prime Minister Theresa May's ministers could oust her
in a row over her latest deal to exit the European Union.
The reports, underscoring deepening uncertainty over Britain's
leadership, gave Brexit-sensitive stocks and sterling their first
major jolt since March when the then Brexit deadline was looming.
Housebuilders Taylor Wimpey , Berkeley Group , Barratt
Development , and Persimmon fell sharply, down 3.7 to 5.4% by
Housebuilders have been particularly sensitive to any signs of
rising likelihood of a hard Brexit, which many investors fear would
damage the world's No. 5 economy.
"What's weighing on the housebuilders is this expectation
that if we did see a change in leadership in the Conservative party it
would be more likely to rally around a no-deal Brexit," said
Edward Park, deputy chief investment officer at Brooks Macdonald in
"Every day that moves on the probability of either no Brexit
or no deal increases. It's very difficult to price the housebuilders,
Brexit-sensitive stocks, or sterling - you know the current price is
wrong because it's either too cheap or too expensive!" he added.
The FTSE 250 index of smaller, more domestically-sensitive
companies, was down 0.5%, lagging the FTSE 100 which was holding up
thanks to its multinational constituents which gain when sterling falls.
Sterling extended losses in the afternoon session and was down
half a percent against both the dollar and the euro around 1400 GMT,
having hit its lowest level since a January flash crash in early
Retailers, which are also highly exposed to the British economy,
fell too. Sainsbury's lost 4% while Marks & Spencer extended
earlier falls after results, down 7.6%.
Brexit-sensitive airlines easyJet and British Airways owner IAG
were down 5.6% and 3.9% respectively, while state-backed Royal Bank of
Scotland dropped 3.6%.
(Reporting by Helen Reid, Additional Reporting by Abhinav Ramnarayan;
editing by Josephine Mason and Jon Boyle)
((Helen.Reid@thomsonreuters.com; +44 20 7542 0402;))