London stocks fell on Wednesday as investors juggled Britain's headline inflation hitting the Bank of England's target against a drop in services price inflation, while Vodafone's gains capped losses.

The blue-chip FTSE 100 fell 0.2% to 8,172.5 points by 7:06 GMT, while the mid-cap FTSE 250 also dropped 0.2% to 20,366.02 points. The pound gained against the dollar.

Investors grappled with a slower-than-anticipated decline in services price inflation, which the Bank of England believes offers a clearer view of medium-term inflation risks.

Data showed services price inflation was down to 5.7% in May, compared with a Reuters poll of economists that expected 5.5%.

Underlying price pressures remained strong, spooking investors that an August rate cut might be off the table.

Headline inflation returned to 2%, the Bank of England's target.

The central bank meets on Thursday to take a call on borrowing costs.

Vodafone gained 1% after the mobile group confirmed it had sold an 18% stake in India's Indus Towers for 1.7 billion euros ($1.83 billion).

Spectris was the top loser on the mid-cap index, falling 11%, after the scientific instruments-maker warned of lower-than-expected profit on weak China demand. (Reporting by Pranav Kashyap in Bengaluru; Editing by Mrigank Dhaniwala)