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June 29 (Reuters) - UK shares inched lower on Monday as

renewed Middle East hostilities weighed on risk sentiment, while

investors also awaited a highly anticipated speech from Andy

Burnham, who is widely expected to be Britain's next prime

minister.

The blue-chip FTSE 100 index fell 0.2% by 0949 GMT,

while the midcap FTSE 250 slipped 0.1%.

* Consumer staple shares weighed on the FTSE 100

after British American Tobacco dropped 1.6% on the

tobacco giant's plans to reduce its workforce by 20%.

* Aerospace & defence stocks came under

pressure with BAE Systems and Babcock falling

1.4% and 7%, respectively. The Ministry of Defence said on

Sunday that the UK will scrap plans to replace its ageing

destroyers to focus on drone warships.

* Mining shares were lower due to a decline in gold

after the recent escalation in the Mideast fueled inflation

concerns.

* Keeping losses in check were energy and

financial shares.

* BT and Verizon announced a deal to combine

their international enterprise operations into a 50:50 joint

venture. Shares of the British telecoms group were marginally

up.

* In politics, investors awaited Labour lawmaker Burnham's

speech for clues on his fiscal policy plan and thinking on the

economy.

* On the economic front, a survey showed British companies'

expectations for growth in the coming quarter fell this month to

their lowest level this year.

* Both the internationally focussed FTSE 100 and the

domestically exposed FTSE 250 ended last week lower.