The blue-chip FTSE 100 hit a eight-week high during the session but closed flat for the day, while the domestically-focussed FTSE 250 index fell 0.5%.

Aerospace and defence stocks hit a record high, climbing 1.4%, led by 2.6% rise in shares of Rolls-Royce after ratings agency Fitch upgraded its credit rating to BB+.

"In February, Rolls-Royce said that a return to investment grade status would allow it to consider a return to resuming shareholder payouts so today's move by Fitch is likely to be well received," said Michael Hewson, chief market analyst at CMC Markets UK.

Leading losses, construction and materials shares dropped 1.6%.

Meanwhile, official data showed British wage growth slowed more than expected in the three months to the end of October, but pay is probably still increasing too quickly to persuade the Bank of England to cut interest rates any time soon.

Across the Atlantic, U.S. consumer prices unexpectedly rose in November while underlying inflation pushed higher, offering more evidence that the U.S. central bank was unlikely to pivot to interest rate cuts early next year.

The Federal Reserve, Bank of England and the European Central Bank will announce their respective decisions during the week, with all three expected to hold rates steady.

Among individual movers, telecoms firm BT Group lost 3.9% after UK's Ofcom proposed a ban on inflation-linked mid-contract price rises.

Hargreaves Lansdown was the biggest loser on the London stock market, falling 6.7% after market watchdog flagged concerns about the interest and fees charged by some investment platforms.

AstraZeneca rose 0.8% after it agreed to buy respiratory syncytial virus (RSV) vaccine developer Icosavax in a deal valued at up to $1.1 billion.

(Reporting by Shashwat Chauhan and Shubham Batra in Bengaluru; Editing by Sonia Cheema, Dhanya Ann Thoppil and Alex Richardson)

By Shashwat Chauhan and Shubham Batra