UPDATE 1-Brexit-sensitive stocks, sterling hit by deepening political turmoil

(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 TW.L , Berkeley Group BKGH.L ,
Barratt Development BDEV.L , and Persimmon PSN.L fell
sharply, down 3.7 to 5.4% by 1450 GMT.
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 London.
"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 .FTMC 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 trade. GBP=D3 EURGBP=D3
Retailers, which are also highly exposed to the British
economy, fell too. Sainsbury's SBRY.L lost 4% while Marks &
Spencer MKS.L extended earlier falls after results, down 7.6%.
Brexit-sensitive airlines easyJet EZJ.L and British
Airways owner IAG ICAG.L were down 5.6% and 3.9% respectively,
while state-backed Royal Bank of Scotland RBS.L dropped 3.6%.