UK stocks extended declines on Thursday, dragged by losses in defence stocks, while global sentiment turned cautious after minutes from the U.S. Federal Reserve's July meeting were perceived to be hawkish.

The blue-chip FTSE 100 was down 0.3%, hovering around one-month lows and set for a fifth consecutive day of losses. Domestically-focussed FTSE 250 dropped 0.6%.

BAE Systems was the biggest loser on FTSE 100, falling over 4% after the Britain's biggest defence company said it agreed to buy Ball Corp's aerospace business for about $5.55 billion in cash.

The aerospace and defence sector index dropped 2.8%, leading sectoral losses, while banks led gains with a 0.7% rise.

Bank of Georgia gained over 11.5%, leading gains among mid-caps, after the company reported higher half-year profit.

The continued sell-off in the FTSE 100 came as recent batch of economic data showed strong inflationary pressures, fanning worries that the Bank of England might keep rates elevated for longer.

"Ultimately, whether we get a hike or a pause, it's less about how many more rate hikes are to come. It's more about how long rates are likely to stay at their current levels and that's the risk," said Michael Hewson, chief market analyst at CMC Markets.

Meanwhile, the Fed's July meeting minutes showed policymakers were divided over the need for more rate hikes, with "some participants" citing risks of pushing rates too far even as "most" policymakers continued to prioritize the battle against inflation.

Precious metal miners fell 1.2% as gold prices touched five-month lows on a stronger dollar and rise in bond yields. (Reporting by Siddarth S in Bengaluru; Editing by Nivedita Bhattacharjee and Varun H K)