UPDATE 1-London stocks slip from near two-week highs as COVID-19 fears weigh

* Investors book profits following Monday's rally

* Halfords tumbles on reporting drop in Q1 sales

* Premier Inn owner Whitbread slides as revenue plunges

* Online trading platform Plus500 tops FTSE 250

* FTSE 100 down 0.9%, FTSE 250 off 0.5% (For a live blog on European stocks, type LIVE/ in an Eikon news window)

By Shashank Nayar and Sagarika Jaisinghani

July 7 (Reuters) - UK shares slipped on Tuesday after marking a strong start to the week as a surge in U.S. coronavirus cases weighed on sentiment, while Halfords tumbled after reporting a drop in quarterly sales despite remaining open during a nationwide lockdown.

The motor and cycling products retailer plunged 6.2% and was on track for its worst day in nearly a month as underlying sales fell 6.5% in its first quarter.

The export-laden FTSE 100 was down 0.9% after climbing to near two-week high on Monday in the wake of a jump in Chinese blue-chip stocks.

The mid-cap FTSE 250 fell 0.5%, with banks , autos and travel and leisure stocks leading declines.

"Investors are getting back to the reality of rising coronavirus cases, which is causing some caution and fear to be back following yesterday's rally," said David Madden, analyst at CMC Markets in London.

Aggressive global stimulus has partly powered a rebound in UK stock markets since a coronavirus-driven crash in March, but the pace of gains has slowed in the past two months with economic figures still on shaky ground.

Data on Tuesday showed British house prices fell for a fourth month in a row in June, the longest run of monthly declines since 2010.

Newspaper publisher Reach tumbled 11.0% and was set for its worst day in more than three months as it said it would cut about 550 jobs — 12% of its workforce — after the COVID-19 pandemic hit circulation and advertising.

Premier Inn owner Whitbread fell 4.3% on reporting a 79% plunge in first-quarter sales as the COVID-19 lockdown shuttered most of its hotels in Britain and Germany.

In a bright spot, online trading platform Plus500 jumped 7.7% to the top of the FTSE 250 after saying revenue in the first-half nearly quadrupled. (Reporting by Shashank Nayar and Sagarika Jaisinghani in Bengaluru; editing by Uttaresh.V)