UPDATE 1-Sterling skids as EU's Barnier says impasse Brexit talks at impasse

* Graphic: sterling and gilt yields http://bit.ly/2dgAXn1

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv (Recasts after Barnier comments)

LONDON, Oct 12 (Reuters) - Sterling skidded three-quarters of a cent on Thursday after the European Union's chief negotiator said Brexit talks were at an "impasse", ramping up the political risks for a currency that has fallen over 12 percent since last year's EU vote.

The European Union and Britain have not made major progress this week in talks about the country's exit from the bloc and are stuck over how much Britain should pay when it leaves, negotiator Michel Barnier said on Thursday.

The pound tumbled 0.6 percent to the day's lows of $1.3137 after the comments, down from $1.3212 beforehand. It was the biggest faller among major currencies.

It weakened by a similar amount against the euro to hit a four-week low of 90.245 pence per euro.

Barnier said Britain had told EU officials it was not ready to specify how much it believed it should pay the bloc, and therefore the two sides were at an impasse.

"(Impasse) is the key word from Barnier triggering pound sales," said Neil Jones, Mizuho's head of hedge fund currency sales in London.

"Time decay is kicking in and we are still at first base. Investors will likely continue to sell sterling.".

Jones said the impact of Barnier's comments on the pound had initially been tempered by Britain's lead negotiator David Davis's more optimistic take. Davis said there had been progress on the area of citizens' rights, which had moved the two sides "even closer to a deal".

British finance minister Philip Hammond said on Wednesday the value of a transitional Brexit deal would decline rapidly if were to drag into next year, but said it was too soon to spend money on contingency plans.

The speech had only minimal impact, with markets until Thursday more focused on strong British data releases this week and broad expectations of interest rate hikes from the Bank of England.

Before Barnier's comments, a weakened dollar had helped bump the pound as high as $1.3244, its strongest since October 4.

The pound has traded in tight ranges as investors fretted that a sharp turnaround in the currency markets to net long sterling positions may come under pressure.

Prime Minister Theresa May will meet EU leaders next week to continue Brexit negotiations, but both sides expect the standoff to continue.

Data from the Royal Institution of Chartered Surveyors showed on Thursday that British house prices faced the weakest outlook since the Brexit vote, which could be interpreted as another sign of a slowing domestic economy. (Reporting by Fanny Potkin; Editing by Gareth Jones and John Stonestreet)