UPDATE 1-Carlsberg to have one UK brewery with Leeds closure

* Carlsberg to close Tetley brewery in UK

* Closure to affect 170 employees

* Shares down 4.67 pct at 245 euros at 1124 GMT

(Adds further details)

LONDON, Nov 5 (Reuters) - Danish brewer Carlsberg (CARLb.CO) will focus its British operations on just one brewery at Northampton after its decision to close its Leeds Tetley's brewery on Wednesday due to falling beer sales in Britain.

Carlsberg, smallest of the four big brewers operating in the UK, is under pressure to cut costs to stay competitive in a tough market, and said it will close its Leeds brewery in northern England in 2011 with the potential loss of 170 jobs.

The maker of Carlsberg and Tuborg beers currently employs 2,000 staff in Britain, including 200 at its Northampton brewery in central England, with the rest in distribution, marketing and other areas.

The Copenhagen-based brewer blamed the closure on challenging market conditions due to falling beer consumption, higher duties, input inflation and regulatory pressures. Talks with the employees affected will start immediately, it added.

The Tetley brewery, now set among office and residential redevelopment on the River Aire, could potentially be very valuable when the property market recovers, analysts said.

Some beer production from the Leeds site may be shifted to Northampton to use up spare capacity or Tetley beer may be brewed by a smaller rival under licence, they added.

"The UK market remains horrible, despite the passing of the smoking ban anniversary. We see no signs of an imminent improvement in UK trading," said analyst Rob Mann at brokers Collins Stewart commenting after Carlsberg issued third-quarter results on Wednesday. [nL5191169]

"This is devastating news. GMB (union) members are in tears on the site this morning ...We will be hoping for a turn around in the market which may help save the site," said Steve Huckerby, organiser at the union.

Carlsberg shares were down 4.67 percent at 245 euros at 1124 GMT.

(Reporting by David Jones; Editing by Jason Neely)