HUNDREDS of jobs are to go after Brittany ferries sank a deal to take over P&O's Portsmouth Le Havre cross-Channel route.

Ferry operator P&O stunned Hampshire last September when it axed routes to Caen, Cherbourg and Le Havre from Portsmouth as part of a nationwide operations review that cost 1,200 jobs.

Rival Brittany Ferries offered hope by stepping in with a deal to take over the two ferries that service the Le Havre route, saving 350 jobs.

However, while competition authorities weighed up the move, the French firm changed its mind.

Brittany Ferries declined to comment on the decision, but "deteriorating market conditions" are understood to be behind the collapse of the deal.

"Business has got a lot tougher and prices are dropping," said a company insider.

The Portsmouth to Le Havre route will now finally close in September, P&O said, adding that there was "no question mark" over the future of its Portsmouth to Bilbao, Spain, service.

Stiff competition from low-cost airlines and Eurotunnel are behind P&O's decision to quit the routes.

Nationally, it reduced the number of ships from 31 to 23 in a bid to save £51m. Analysts predict P&O's ferry division will have lost between £10 and £15m last year, when the shipping giant publishes its results next week.

A P&O spokesman said: "P&O is naturally very disappointed with this decision and the implications it has for 350 staff who would otherwise have transferred to Brittany Ferries.

"P&O has already made it clear that it is losing money on the route and cannot afford to continue it."