LONDON (AP) — British construction and retail stocks took a battering yesterday after a major housebuilder failed to secure extra funding amid a huge drop in business and a leading retailer reported a drop in sales because of slumping consumer spending.

The construction industry was shaken by Taylor Wimpey PLC's revelation that it had not won an anticipated deal to raise around £500 million ($996.5 million) and that it would slash around 900 jobs.

As the Chartered Institute of Purchasing and Supply added to the gloom with its worst report on construction activity in more than a decade, Taylor and Wimpey led a shares rout, plunging more than 50 percent.

Elsewhere in the sector, Barratt Developments PLC sank 29 percent, Persimmon PLC dropped 18 percent and Bellway PLC lost 13 percent. Only Balfour Beatty PLC escaped, dipping just 0.7 percent after bucking the wider trend to report that its business for the year to date remains strong.

"Housebuilders are being hit extremely hard as housing market activity and house prices crumble in the face of elevated affordability pressures and very tight lending conditions," said Global Insight economist Howard Archer.

Taylor Wimpey confirmed that position when it revealed it had been unable to raise the additional capital from a range of potential investors and warned more trouble could be ahead. The company said it would write down the value of land and work-in-progress by around £550 million ($1.1 billion) in Britain, £70 million ($140 million) in the United States and £40 million ($80 million) in Spain.

"We expect that the UK housing market will remain weak at least through 2008 and we do not anticipate any recovery in the short-term," the company added in a statement to the London Stock Exchange.

The purchasing and supply institute said its construction purchasing managers' index — covering the housing, commercial and civil engineering sectors — dropped to 38.8 in June compared to 43.9 in May, the lowest level since April 1997.

"The performance of the housing industry was by far the worst, with activity levels falling steeply," the institute said.

The retail sector, meanwhile, was hit by a report from food and clothing bellwether Marks & Spencer PLC that its like-for-like sales in its home market fell 5.3 percent in the first quarter, significantly worse than the 1.7 percent drop in the fourth quarter.

M&S chairman Stuart Rose said the company expects market conditions "to continue to remain difficult".

The latest evidence of consumers reining in spending in the face of higher mortgage or rent payments and rising energy and food bills sent wider ripples, with shares in Britain's leading grocer Tesco PLC down four percent, while No.3 J Sainsbury PLC fell six percent.