The blue chip FTSE 100 <.FTSE> index ended down 0.28 percent at 7,747.18 points, retreating further from a record set last week and slightly underperforming the broader European market.

British inflation dipped slightly after six months of gains, data showed earlier, suggesting the effects on consumer prices of the pound's slide after the 2016 Brexit vote may be starting to fade.

Economists said it was too early to predict a sustained slowing of price growth. But sterling fell following the data release, boosting the FTSE 100 into positive territory.

Interest rate-sensitive banks propped up the FTSE, but the downward pressure from oil and mining shares grew through the rest of the session, pulling the index into the red.

BP (>> BP) slid 2.9 percent after the energy company said it would take a charge of around $1.7 billion in its fourth-quarter results as part of the settlement of the 2010 Deepwater Horizon spill in the United States.

Weaker Brent crude prices also weighed on the energy sector, while a slide in copper prices pulled BHP Billiton (>> BHP Billiton Plc), Glencore (>> Glencore), Rio Tinto (>> Rio Tinto) and Anglo American (>> Anglo American) down by between 1.4 and 3 percent. [O/R] [MET/L]

Primark-owner Associated British Foods (>> Associated British Foods) advanced 2.3 percent on the back of a Barclays upgrade to "overweight" from "equal weight", with analysts saying that in five to 10 years they believe ABF's Primark clothing retail arm can build a U.S. business the size of its European operation today.

Outsourcer Capita tumbled 6 percent after client Prudential said it was transferring the administration of its life and pensions business to a new supplier.

Apparel retailer JD Sports (>> JD Sports Fashion PLC) saw its shares jump more than 6 percent after it raised its guidance following a strong Christmas trading performance.

Provident Financial (>> Provident Financial) tumbled 12 percent after the subprime lender said it expected to report a loss of about 120 million pounds at its consumer credit division - at the upper end of its guidance.

(For a graphic on FTSE versus sterling, click http://reut.rs/2DBqS2I)

(Reporting by Kit Rees; Editing by Tom Pfeiffer/Mark Heinrich)

By Kit Rees