Wires

UPDATE 1-UK shares slip further as Middle East tensions flare

Shashwat Awasthi

* FTSE 100 down 0.5%, FTSE 250 down 0.9%

* Iran missile attack jolts equity markets

* NMC, Finablr tumble after shareholders sell stake

* BT outperforms blue-chips (Adds news items, analyst comments, updates share prices)

Jan 8 (Reuters) - British shares slipped on Wednesday as tensions in the Middle East threatened to boil over after Iran retaliated by launching missile strikes at U.S. forces in Iraq, driving investors away from risky assets and into safe-haven holdings.

The FTSE 100 fell 0.5%, down for the third straight session, following news that Iran had hit back in response to the killing of a top Iranian commander by the United States last week.

The FTSE 250 tumbled nearly 1% as a steep fall in payment processing firm Finablr and stock downgrades by BofA Global Research exacerbated the broader gloom.

"The big question is whether President Trump follows through on his promise to hit back at Iran if they did retaliate," CMC Markets analyst Michael Hewson said.

"While this might seem complacent in terms of some overall valuations, it's not immediately clear what else investors can do apart from hedging their stock market exposure, by moving money into gold as well as other havens."

Blue-chip NMC Health slumped 18% and Finablr slid 14% to a fresh low after a discounted share sale by major shareholders of both firms. Finablr's unit Travelex separately confirmed it was hit by a software virus attack.

NMC shares had crashed nearly 30% last month after criticism from short-seller Muddy Waters, and Finablr also suffered as the firms share a founder. On Wednesday, the two stocks led losses on their respective indexes.

Anglo American dropped 2.5% after saying it was in advanced talks to buy fertiliser maker Sirius Minerals. Sirius' shares soared 33% to their highest level in nearly four months.

Shares of British Airways owner IAG and travel firm TUI dipped 2% each as oil prices firmed amid jitters in the Middle East.

OANDA analyst Jeffrey Halley said airlines shares could also face headwinds from a potential closure of the Iranian airspace as several crucial East-West air corridors transit Iran and its neighbouring airspace.

Telecom firm BT outperformed, however, rising 2% after UK's telecom regulator said it would "supercharge" investment in fibre broadband networks with major proposals to change regulation of BT's Openreach network.

Industrial group Rotork and electrical engineering firm Spectris were the biggest drags among midcaps after bearish action from BofA Global Research. (Reporting by Shashwat Awasthi in Bengaluru; Editing by Arun Koyyur)