Stg falters on tumbling UK housing shares, M&S warning

* Stg down 0.6 percent vs euro at 79.63 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 on Wednesday as tumbling UK housing shares and a profit warning from 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. Its shares fell more than 50 percent, 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.

"Some of the numbers are horrendous, all the news is dreadful and really sterling should be in big trouble," State Street currency strategist Lee Ferridge said.

"Our data shows that people have been long of sterling but they are starting to unwind that position. For me with euro/sterling, given the data we're seeing we should be at all-time highs," he said.