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UK bookmakers have seen their shares fall sharply after a report suggesting the maximum stake on fixed-odds betting terminals could be slashed.

Ministers are likely to cut the stake from £100 to £2 after a consultation closes, .

Shares in Britain's biggest bookmaker, Ladbrokes Coral, were down 9% in afternoon trade. William Hill fell 12%.

Ladbrokes Coral boss Jim Mullen dismissed the report as yet more "rumour and speculation".

Currently, people can bet up to £100 every 20 seconds on electronic casino games on the machines, but ministers are considering a new limit somewhere between £2 and £50.

William Hill chief executive Philip Bowcock said: "The impact of this rumour on our share price this morning illustrates the drastic impact such a move would have on the retail betting sector."

Mr Mullen said the industry had not yet sent their responses to the consultation, which closes on Tuesday.

"The industry has also always made it clear that a cut to stakes will have serious consequences - resulting in shop closures which will ultimately affect jobs, tax revenue and the funding of racing," he said.

The machines generated more than £1.8bn in revenue for the industry last year, helping to support growth for bookmakers.

Cutting the maximum stake to £2 would see £639m lost over the next 10 years, according to the government's consultation documents.

Analysts at Davy stockbrokers estimated Ladbrokes Coral's earnings could fall by 28% and William Hill's by 24%.

But they also stressed that "a final decision has not yet been made".

The Sunday Times reported that an "overwhelming" response to the consultation had persuaded ministers to reduce the maximum stake to £2.

Mr Mullen said: "There is no evidence that machine customers will switch their spend to sports betting such as horse racing, and our experience is that they won't."

Shares in Paddy Power Betfair, which has a much smaller High Street presence, fell as much as 2.5% before recovering.

Online gambling firm GVC Holdings, which has agreed a deal to buy Ladbrokes Coral for up to £4bn, saw its shares drop by 2%.