The blue-chip FTSE 100 was down 0.1%, as sterling edged up against the dollar, breaking above $1.38 and touching its highest level in almost three years as Britain's speedy coronavirus inoculation programme supported the currency.

Consumer stocks such as Compass Group, Ocado Group and Diageo Plc were the biggest drag on the index, falling between 1% and 7%.

"Looks like it has turned into a bit of a more broadbased selloff, although still only modest, with European markets leading the way to the downside," said Chris Beauchamp, chief market analyst at IG.

The mid-cap FTSE 250 index, fell 0.6% to snap a seven-day winning streak, partly weighed down by a 3.7% decline for homebuilder Redrow, even as it reported a higher first-half profit.

A raft of global stimulus has helped the FTSE 100 rebound nearly 34% from a coronavirus-led crash in March 2020, but the index is still about 15% below its highest level last year at a time when the U.S. benchmark S&P 500 is scaling record highs.

Travel and leisure stocks led declines among FTSE subsectors after transport minister Grant Shapps asked British people not to book holidays domestically or abroad until more is known about the success of Britain's COVID-19 vaccination programme.

The Bank of England told insurers not to expect any big reduction in capital requirements after Brexit, adding that more capital could be "part of the answer" to meeting a 1.7 billion pound bill for COVID-19 claims.

In company news, homeware retailer Dunelm Group rose 6.1% on the mip-cap index after reporting a higher first-half profit on strong online demand.

Insurer Lancashire fell 6.6% even after posting a surprise profit for the year.

(Reporting by Shivani Kumaresan in Bengaluru; Editing by Uttaresh.V and Shounak Dasgupta)

By Shivani Kumaresan