Sterling falls as housing stocks tumble

LONDON, July 2 (Reuters) - The pound fell against the dollar and euro on Wednesday dragged down by UK housing stocks slumping as confidence in the sector took a further knock after Taylor Wimpey failed to complete capital raising.

Taylor Wimpey was down 49 percent while Barratt Developments fell 29 percent and Persimmon slid 22 percent as gloom on the housing sector thickened in the wake of the negative news from Taylor Wimpey.

"Sterling had been doing far too well in the last few days and may be today's information is going to push it down. All the news we are receiving from the UK housing sector is really catastrophic at the moment," said Russell Jones, head of fixed income an currencies global research at RBC Capital Markets.

"It's further evidence that the economy is in deep trouble...and that doesn't inspire confidence in currency markets. It's adding to the sense of gloom, along with the weather."

By 0719 GMT the pound was down 0.2 percent at $1.9904 <GBP=> while the euro was up 0.5 percent at 79.54 pence <EURGBP=>.

(Reporting by Toni Vorobyova and Simon Falush)