UPDATE 1-Madame Tussauds-owner Merlin says Manchester, London attacks hit demand

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LONDON, June 13 (Reuters) - Visitor attractions group Merlin Entertainments has seen a drop in demand from domestic tourists following recent attacks in Manchester and London and believes foreign visitors could stay away in the coming months, it said on Tuesday.

The firm, which runs tourist attractions such as Madame Tussauds waxworks, Sea Life and The Dungeons, said that trading in its London business in the early part of the year had benefited from an increase in foreign visits to Britain, reflecting the weaker pound.

It said this continued in the immediate aftermath of an attack in Westminster on March 22, although that incident did result in a softer domestic, day-trip market.

Merlin said the subsequent attacks in Manchester on May 22 and London Bridge on June 3 resulted in a further deterioration in domestic demand.

"Given the typical lag between holiday bookings and visitation, we are also cautious on trends in foreign visitation over the coming months," the firm said.

Merlin said overall group trading to date has been broadly in line with expectations, noting that over 70 percent of 2016 profit was generated from outside the UK.

"I remain confident in the company's underlying growth prospects," said Chief Executive Nick Varney.

Shares in Merlin, up 12 percent so far this year, closed Monday at 503 pence, valuing the business at 5.14 billion pounds ($6.52 billion). ($1 = 0.7884 pounds) (Reporting by James Davey; editing by Kate Holton)