The FTSE 100 inched up 0.04%, holding just below a two-month peak hit earlier this week, while the midcap FTSE 250 index gained 0.4%.

Global markets treaded water as investors were reluctant to place big bets ahead of the release of U.S. inflation data, which is expected to have risen at a much slower pace in July due to a sharp drop in the cost of gasoline.

The report, however, is still likely to show that underlying inflation pressures remained elevated as the Fed mulls whether to embrace another super-sized interest rate hike in September.

"Even if the inflation cools slightly, the Fed will look to press ahead with a 75 bps next month because they're confident that the labour market can withstand another rate hike," said David Madden, market analyst at Equiti Capital.

"We're still a long way away from the (Fed's) 2% target."

Insurer Aviva jumped 8.8% to the top of FTSE 100 after saying it planned to give more money back to shareholders as it posted a better-than-expected 14% rise in first-half operating profit.

Motor insurer Admiral and Asia-focused insurer Prudential Plc also inched higher after results.

Deliveroo gained 2.7% after the food delivery company's chief executive officer said the gross transaction value (GTV) of its orders had picked up since the end of the second quarter.

The company, which reported a bigger first-half pre-tax loss, also said it was consulting on leaving the Netherlands market after failing to gain a strong local position.

Royal Mail fell 1.5% after it warned of a full-year loss in the UK if the Communications Workers Union (CWU) went ahead with its plans of a four-day strike.

Boosting the midcaps, advertising and marketing co 4imprint group jumped 15.2% to a record high after strong first-half performance.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Rashmi Aich and Sriraj Kalluvila)

By Sruthi Shankar