Sterling falls after Fitch signals UK rating risk

* Sterling bruised by Fitch comments about UK debt rating * Pound trims losses, data shows UK retail, housing improves

* BoE inflation report due on Wednesday could support pound

By George Matlock

LONDON, Nov 10 (Reuters) - Sterling fell on Tuesday after a ratings agency said highly-indebted Britain was the major economy most at risk of losing its triple-A rating.

The pound retreated from a three-month high against the dollar hit on Monday, after Fitch told Reuters Britain would have a tougher time than the United States in sustaining its fiscal deficit without impacting interest rates or the currency.

A further significant fiscal stimulus package could put the coveted rating at risk, it said. [ID:nT286946]

As the UK government borrows heavily to pull the economy out of recession, its weak fiscal position has plagued sterling, and traders often sell the currency on any suggestion Britain may lose its top-notch rating.

Only Britain, the United States, Germany and France are among the major economies are rated AAA and any change could affect the cost of government borrowing.