Wires

FTSE 100 slips amid simmering Middle East worries

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* FTSE 100 down 0.5%, FTSE 250 down 0.4%

* Middle East tensions simmer

* Airlines fall, oil stocks gain on surging crude prices

Jan 6 (Reuters) - London's main index began the first full trading week of the new decade in the red, as escalating tensions in the Middle East sapped demand for risky assets.

The FTSE 100 dropped 0.5% in early deals after U.S. President Donald Trump threatened sanctions on Iraq and retaliation on Iran if they responded with force to a U.S. air strike last week. The FTSE 250 shed 0.4%.

Shares of airlines fell as higher oil prices raised worries of a hit to their margins, with British Airways owner IAG and easyJet shedding about 2.5% each. However, oil majors Shell and BP outperformed.

Morrisons and Sainsbury's fell 3% and 1.5%, respectively. A Times report said British supermarkets will report https://www.thetimes.co.uk/edition/business/christmas-fails-to-light-up-supermar k e t s - v j s r h k j w t "underwhelming" Christmas sales, while major competitor Aldi UK separately reported higher sales. (Reporting by Shashwat Awasthi in Bengaluru Editing by Arun Koyyur)