UK's Starmer faces biggest challenge yet as resignation report overshadows King's Speech

* The Times reports Streeting is preparing to resign

* If true, ​his move ⁠could trigger a leadership contest

* Report overshadows ​State Opening of Parliament

* King Charles set to read out government's priorities

* Starmer is resisting calls to quit after local election losses (Recasts ​with ‌Time newspaper report on Streeting preparing to resign)

LONDON, May 13 (Reuters) - Keir ⁠Starmerfaced his biggest challenge yet on Wednesday when his health minister ⁠was reported to be readying his resignation ​to try to trigger a contest to replace a British prime minister who had sought some respite to set out his government's agenda.

The report in the Times newspaper that health minister Wes Streeting was preparing ​to resign ‌as early as Thursday to mount a formal leadership challenge overshadowed the King's Speech, when the government formally sets out its agenda.

British government bond futures fell sharply on the report, erasing their day's gains, as did 20- and 30-year government bonds, which showed a small rise in borrowing costs on the day.

Earlier, ​Streeting briefly met Starmer at his Downing Street office but said he would not comment on ‌that meeting. His office did not immediately respond to a request for comment.

Starmer has tried to brush off challenges to his authority and will press ‌on with unveiling plans to boost economic growth, energy security and defence in a King's Speech which could be his last and might never be implemented.

LEADERSHIP RACE COULD BE TRIGGERED

But a direct challenge ​from Streeting would signal a deeper crisis for Starmer, which could trigger a new leadership contest if the health minister has ‌the support of 81 Labour lawmakers to launch a bid.

That could encourage other rivals to enter the race, although two potential challengers, Greater Manchester mayor Andy Burnham and former deputy prime minister Angela Rayner, have to overcome ⁠hurdles before ⁠they would be able to run.

Burnham does not have the ‌necessary seat in parliament to mount a challenge and Rayner has yet to fully resolve the tax issues that prompted her ​resignation from office last ​year.

Streeting is viewed as being on the right of the Labour Party, ‌while both Burnham and Rayner hail from its "soft left". Some investors are nervous over the possible election of a more traditional left-wing, tax-and-spend Labour prime minister.