Fears over higher inflation knocked London's blue-chip stocks lower on Wednesday, while supermarket retailer Tesco topped the index following its upgraded outlook and strong first-half results.

The FTSE 100 index eased 0.9% at 0705 GMT, with Astrazeneca, Diageo and Unilever among the top drags.

A recent survey found that more British manufacturers plan to raise their prices than at any other point in the past three decades, adding to signs of growing inflationary pressure.

The domestically focussed mid-cap index fell 0.7%, with consumer discretionary stocks leading declines.

Barclays downgraded the domestic stock index to "underweight" on Wednesday.

In company news, Tesco PLC rose 3.9% after raising its full-year outlook over a strong profit in the first half results.

Global recruitment firm PageGroup climbed 6.9% after it raised its profit forecast.