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* PPHE Hotel Group surges on £920.9 million takeover

proposal from Fattal Hotel Group

* BT drops after report UK to oppose Sunil Bharti Mittal

stake increase

* Energy and defence stocks outperform amid renewed

Middle East tensions

* FTSE 100 down 0.8%; FTSE 250 down 0.4%

May 28 (Reuters) - Britain's FTSE 100 slipped on

Thursday following a seven-day winning streak, as renewed

U.S.-Iran hostilities clouded prospects for reopening the Strait

of Hormuz.

The blue-chip FTSE 100 index fell 0.8% to 10,418.33

points by 1013 GMT while the midcap FTSE 250 dipped 0.4%

as it eased from a near three-month high.

* BT slumped about 4.7%, leading losses on the FTSE

100 after a report said the British government will oppose any

attempt from Indian billionaire Sunil Bharti Mittal to increase

his stake in the telecoms group.

* Energy and defence stocks

were the only bright spots after Iran and the U.S. traded air

strikes, highlighting the fragility of negotiations aimed at

turning the tenuous ceasefire that took effect in early April.

* Hopes of an eventual reopening of the Strait, a vital

gateway for global energy, along with easing bets of domestic

interest rate hikes have buoyed the recent rally in UK stocks.

* In company news, PPHE Hotel Group soared 23% after

the hospitality real estate firm said it has received a £920.9

million ($1.24 billion) takeover proposal from Israel's Fattal

Hotel Group.

* IQE dropped 3.3% after the chipmaker reported a

drop in full-year adjusted core profit.

* Ousted BP Chair Albert Manifold acknowledged he

may have "pushed hard" for change, but again denied any

misconduct, days after he was dismissed from the role. BP shares

were largely flat.