* FTSE 100 down 0.7%, FTSE 250 off 0.3%

* Airlines fall after Ryanair reports profit slump

* Computacenter ( CUUCF ) jumps after brokerage upgrade

(Updates after markets close)

By Shashwat Chauhan and Tharuniyaa Lakshmi

July 20 (Reuters) - The main UK stock indexes closed lower

on Monday as continued U.S.-Iran tensions sapped risk sentiment

globally, offering a muted reaction to Andy Burnham becoming

Britain's seventh prime minister in a decade.

The internationally focused FTSE 100 lost 0.7% to

mark its biggest one-day fall in about two-weeks. The mid-cap

FTSE 250 fell 0.3% and the small-cap index eased

0.2%.

Burnham pledged to re-shape Britain's politics to deliver a

new economic model and revive a nation "fed up" with a revolving

door of leaders. He said he would set out immediate measures on

Tuesday to ease everyday pressures on Britons.

A key first decision will be his choice of finance minister.

Friction in this axis of government has brought down previous

administrations.

"His Chancellor will have to assess a tighter fiscal

backdrop. Headroom appears limited, with earlier buffers partly

eroded by higher rates, a softer macro-outlook and renewed

geopolitical risks," said Sanjay Raja, Deutsche Bank's chief UK

economist.

An early frontrunner for the position, energy security and

net zero minister Ed Miliband, has been the object of hostile

briefing, and interior minister Shabana Mahmood now appears

favourite for the job.

Interest-rate sensitive homebuilders led

losses among the major FTSE 350 sectors, down 3.5%. Long-dated

British government bond yields edged up, with the on the 30-year

note hitting a two-month high.

Utilities, often traded as bond proxies due to

their steady stream of dividends, dipped 1.4%

Heavyweight Pharma and Biotech stocks lost

1.6%, with AstraZeneca ( AZN ) - the second most valuable

company in the UK in terms of market capitalization - down 1.7%.

Risk-sentiment remained shaky globally as U.S. strikes on

Iran entered a ninth straight day. Yemen's Iran-aligned Houthis

also stated they were imposing a naval blockade on Saudi Arabia.

In broad-based signs of weakness, banks lost

0.7% and industrial metal miners shed 1.1%.

UK-listed shares of airlines came under pressure after

Europe's largest airline by passenger numbers Ryanair's

profit slumped by a third in its most recent quarter on higher

fuel costs and lower fares.

Wizz Air ( WZZAF ) fell 2.9%, British Airways' owner IAG

dipped and easyJet eased 1.4% each.

Among others, Computacenter ( CUUCF ) jumped 5.6% after

brokerage Berenberg upgrades its rating on the technology

services provider to "buy" from "hold".