UK dealers struggle to meet gold coin demand

* Investors favour legal tender coins ahead of CGT decision

* Dealers report order backlog for sovereigns, Britannias

By Jan Harvey

LONDON, June 8 (Reuters) - UK bullion dealers are struggling to source enough gold sovereign and Britannia coins to keep up with surging demand ahead of an expected hike in capital gains tax (CGT) in the new government's emergency budget on June 22.

Dealers are reporting a backlog of orders for bullion coins recognised as UK legal tender, which are exempt from CGT.

Anthony Baird, managing director of gold dealer Baird & Co, says the company cannot deliver any Britannia coins until August due to lack of supply.

"We buy directly from the public," said Linda Warner, sales manager at bullion merchant ATS Bullion. "In the last couple of weeks, supply has been drying up because people hold on to what they've got in a situation like this."

The supply situation is worse from overseas sources, with European sales onto the market of coins and other forms of investment bullion particularly slack.