UPDATE 1-BAA August traffic down 0.6 pct

* BAA’s August UK traffic 10.6 mln vs 10.7 mln

* BAA August air frieght up 13.7 pct yr-on-yr

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LONDON, Sept 10 (Reuters) - Passenger traffic at BAA airports fell 0.6 percent in August year-on-year, hit by the continued weakness of the UK leisure market, which has led to casualties among small British tour operators.

BAA, which is majority owned by Spain's Ferrovial FER.MC, on Friday said 10.6 million passengers flew from its UK airports last month, down from 10.7 million in the same month a year ago.

The company, which owns London’s Heathrow and Stansted airports but sold Gatwick for 1.5 billion pounds ($2.3 billion) last year, said 6.5 million passengers flew from Heathrow in August -- 2.5 percent up on the same month a year ago.

“Heathrow benefited from its greater exposure to the business travel sector, while the other UK airports in the group depend more on the currently weak UK outbound leisure market, which continues to be adversely affected by the continuing economic uncertainty that has led to casualties among smaller UK tour operators,” the company said in a statement.

At Stansted, passenger numbers dropped 6.1 percent, largely as a result of reductions in seat capacity at airlines using the airport.

BAA said air freight, a leading indicator of the health of world trade, rose 13.7 percent at BAA airports, with the figure for 2010 well up on last year.

(Reporting by Rhys Jones; editing by Sarah Young)

$1=.6490 Pound