The blue-chip FTSE 100 index <.FTSE>, which reached a 14-month high in the previous session, fell 0.7 percent to 6,893.92 points.

The FTSE 100 has recovered from a slump in the immediate aftermath of the shock "Brexit" referendum in late June that saw Britain vote to quit the European Union.

A move this month by the Bank of England to cut interest rates to record lows has hit returns on bonds and cash, driving investors to the better returns on offer from stocks.

However, data on Tuesday that showed higher-than-expected inflation in Britain pointed to the impact on the UK economy from Brexit and a generally weaker sterling.

"This week represents the first true week of economic data from the United Kingdom following the unexpected Brexit outcome of the EU referendum vote, but a few shocks are already being heard after the news that import prices increased at the strongest rate since 2011," said FXTM analyst Jameel Ahmad.

Stocks most exposed to a weaker domestic British economy, such as banks and retailers, underperformed.

Retailer Marks & Spencer (>> Marks and Spencer Group Plc) fell 3.2 percent, while the FTSE 250 mid-cap index <.FTMC> - which contains more domestically-focused companies than the more global ones in the FTSE 100 - fell 0.7 percent.

However, mining stocks outperformed to rise in spite of the weaker market, with Antofagasta (>> Antofagasta plc) surging 8.7 percent after posting an increase in mid-year profits.

The FTSE 100 is up around 10 percent so far in 2016, although the value of UK shares in U.S. dollar terms has been impacted by a fall in sterling after the Brexit vote.

(Additional reporting by Kit Rees; Editing by Robin Pomeroy)

By Sudip Kar-Gupta