* FTSE 100 little changed
* Housebuilders fall, UK inflation takes surprise jump
* Weak German investor morale hurts broader sentiment
By Andrew Winterbottom
LONDON, July 15 Britain's top shares traded flat on Tuesday, held back by housebuilders, on concern UK interest rates will soon rise. Weakening German investor morale took its toll on broader market sentiment.
Focus will shift later in Tuesday's session to U.S. retail sales numbers and Federal Reserve Chair Janet Yellen's testimony on Fed policy before the Senate Banking Committee for clues as to the market's next moves.
Barratt Developments led the FTSE 100's losses, falling nearly 3 percent. Persimmon fell nearly 2 percent. Mid-caps Redrow, Taylor Wimpey and Bovis Homes shed 2.7 to 3.3 percent.
Shares in housebuilders, volatile in recent weeks, came under pressure as a report on Tuesday showed British inflation unexpectedly rose to a five-month high in June.
"The feeling seems to be that interest rates could potentially go up sooner than the market expects, given the way that the inflation data was reported," Manoj Ladwa, head of trading at TJM Partners, said.
Housebuilders sold off in mid-June when Bank of England Governor Mark Carney said rates may rise sooner than markets were predicting. They recovered towards the end of the month when the BoE imposed measures aimed at curbing house prices that turned out to be more lenient than the builders had feared.
Carney said on Tuesday the central bank's forward guidance was intended to signal how interest rates might change over the medium term, not pinpoint the timing of a first hike.
The broader FTSE 100 index, up 2.94 points, was flat in percentage terms, at 6,749.08 points by 1140 GMT. It was also hampered by German investor morale data, which dropped to its lowest in 1 1/2 years in July.
Tuesday's gainers were led by basic resources stocks. The UK mining index rose 0.8 percent on expectations a gradual global economic recovery will improve demand for metals and on sector earnings results to be released tomorrow. (Reporting By Andrew Winterbottom)