By Shashank Nayar and Amal S
(Reuters) - London's FTSE 100 fell on Thursday, dragged down by heavyweight mining and financial stocks, as investors weighed risks from rising global COVID-19 infections and supply chain disruptions.
The blue-chip FTSE 100 index ended 0.4% lower, snapping a four-day winning streak, with Rio Tinto (LON:RIO), BHP Group, Anglo American (LON:AAL) and Polymetal International being among the top drags.
The domestically focussed mid-cap index eased 0.1% after scaling record highs in the previous session, with travel-related stocks leading the declines.
"Broadly speaking we're seeing a lot more caution in the market today ahead of tomorrow's event... and some profit taking may be kicking in some of these commodity markets alongside a little bit of risk aversion," said Craig Erlam, senior market analyst at Oanda.
The FTSE 100 has recovered 10.2% so far this year, supported by easing COVID-related restrictions and dovish central bank policies. The index had slumped 14% last year amid the pandemic.
The FTSE 100 still underperforms its European and U.S. peers as it is more likely to be affected by global factors such as a weaker dollar as most companies listed on it have a wider international presence.
Global stocks eased as investors reduced their risk exposure ahead of the Federal Reserve's Jackson Hole symposium on Friday and what central bank Chair Jerome Powell might say about U.S. tapering monetary stimulus. [MKTS/GLOB]
"If Powell maintains the line that policymakers recently looking to taper this year, then I think the markets could be in for a bit of a nasty surprise and I think that's seems to be what they're kind of positioning for," Erlam added.
Among stocks, recruitment agency Hays Plc (LON:HAYS) added 4.1% after it forecast a "dramatic" recovery in the jobs market and said it would resume dividends.
U.K. bakery and fast food chain Greggs Plc rose 0.2% even after it became the latest food business to acknowledge a hit from supply chain interruptions. Retail stocks were down 0.3%.
Graphic: FTSE 100 underperforms European index https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwwxydvo/FTSE%20100%20august%2026.png