UPDATE 1-London stocks slide as Spain quarantine hits airlines

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* IAG, TUI, easyJet lead declines on both benchmark indices

* U.S.-China friction, surging COVID-19 cases dent risk demand

* Miners track gains in copper prices on bets of U.S. stimulus

* Antofagasta climbs on report of deal with Chile union

* FTSE 100 down 0.2%, FTSE 250 off 0.5% (Adds comments; updates prices)

By Sagarika Jaisinghani

July 27 (Reuters) – UK shares dipped on Monday as a two-week quarantine on all travellers from Spain hammered airline stocks, with simmering U.S.-China tensions and a surge in global COVID-19 cases also sparking a flight from risk assets.

The blue-chip FTSE 100 was down 0.2%, with a 9.2% plunge for British Airways-owner IAG putting the company on course for its worst day since March. The mid-cap FTSE 250 was off 0.5%.

London-listed shares of Europe’s biggest holiday company, TUI AG, tumbled 11.7% after the company said it had decided to cancel all holidays to mainland Spain through Aug. 9 following the UK’s decision to quarantine travellers.

EasyJet and Carnival were also among the biggest decliners on the FTSE 250, with the wider travel and leisure sector losing 2.4%.

“We had a pretty decent rally (in the past few months) and some of these stocks got a little overbought in anticipation that things are going to get back to normal very smoothly,” said Keith Temperton, analyst at Lombard Forte.

UK stock markets have rebounded sharply from a coronavirus-driven selloff in March as a raft of global stimulus and easing business restrictions fuelled optimism about a swift post-pandemic economic recovery.

But with the relentless surge in global coronavirus infections raising the spectre of another round of lockdowns, investors are betting on more government and central bank stimulus to blunt the business damage from the pandemic.

Mining stocks outperformed the wider FTSE 100 on Monday as hopes of more U.S. coronavirus stimulus drove up London copper prices.

Autos, banks and aerospace-related stocks were among the biggest decliners.

Antofagasta rose 2.9% to the top of the FTSE 100 as the union of workers at its Zaldivar copper mine in northern Chile told Reuters that it had reached a contract deal with the Chilean-based miner, averting the risk of a walk-off.

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