UK service sector stagnates, costs soar in April -CIPS

* CIPS/NTC Purchasing Managers Index for British services sector 50.4 in April (March 52.1), below 51.6 forecast. Click on <PMI/GBSA> for full data.

* Headline business activity index weakest since March 2003, expectations index (April 65.3, March 65.8) at the lowest since October 2001

* Highest input prices index since series began in 1996 (April 67.3, March 66.2)

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By Matt Falloon

LONDON (Reuters) - Growth in Britain's dominant services sector all but dried up in April, sliding to a five year low as companies struggled against the sharpest rate of cost inflation on record, a survey showed on Tuesday.

Sterling fell and interest rate futures rallied as investors felt the weak activity reading might tip the balance in favour of an interest rate cut from the Bank of England this week, despite current inflation worries.

Confidence in the services sector fell to its lowest since the aftermath of the attacks on the United States in 2001, with fears intensifying about the impact of the credit crunch on the economy beyond the hard-hit financial sector.