Stg knocked by diving UK housing shares, M&S

* Stg down 0.45 percent vs euro at 79.50 pence <EURGBP=>

* Pound hit as UK housing stocks dive, M&S issues warning

* Euro up broadly ahead of expected ECB rate hike on Thurs

LONDON, July 2 (Reuters) - The pound fell broadly Wednesday as tumbling UK housing shares and a profit warning from iconic retailer Marks and Spencer cast a further shadow over Britain's already slowing economy.

Confidence in the UK housing sector was knocked after Taylor Wimpey (TW.L: Quote, Profile, Research) failed to complete a capital raising. Taylor Wimpey shares fell more than 50 percent at one point, leading others south -- including Barratt Developments (BDEV.L: Quote, Profile, Research).

Separately, shares in Marks and Spencer (MKS.L: Quote, Profile, Research) hit a 7-year low after the clothes, food and homewares group issued a shock profit warning, adding that others were likely to follow suit in a deepening consumer downturn.

Analysts said sterling was feeling the pinch of deteriorating economic conditions, set against the impact of rising price pressures.

"Sterling had been doing far too well in the last few days and maybe 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.