Britain's FTSE edges lower, caution before ECB meeting

* FTSE 100 index falls 0.2 percent

* Caution before ECB's policy meeting

* Wolseley (LSE: WOS.L - news) rises after update, G4S (LSE: GFS.L - news) falls

By Atul Prakash

LONDON, June 3 (Reuters) - Britain's top share index edged lower on Tuesday, away from 14-year highs, with investors awaiting euro zone inflation data and the European Central Bank's meeting this week.

The blue-chip FTSE 100 index was down 0.2 percent at 6,853.67 points by 0757 GMT, not far from a 14-year high of 6,894.88 on May 15. The index is less than 2 percent below its record high of 6,950.60 set in late 1999.

"People are staying away from placing strong bets ahead of the ECB's crucial policy meeting. Investors are expecting some easing measures from the central bank, but are cautiously positioning themselves to avoid any disappointment," David Battersby, investment manager at Redmayne-Bentley, said.

"The market is just pausing for breath. I remain bullish and do think that there is further upside potential for the stock market in the medium term."

Investors awaited inflation and employment data from the euro zone later in the session for hints about the ECB's likely move at its meeting on Thursday.

The ECB is widely expected to trim its refinancing rate, send its deposit rate into negative territory and launch a long-term refinancing operation targeted at businesses. Another cut to the ECB's deposit rate, currently at zero, would effectively charge banks to park cash with it overnight.

"Sentiment for stocks remains positive, although many traders are likely to remain on the sidelines until the ECB meeting is out of the way," Markus Huber, senior sales trader at Peregrine & Black, said.

"Day traders continue to prefer to take advantage of any intra-day sell-offs by buying dips, speculating that we will continue to have range-bound markets with overall very little direction."

Among individual sharp movers, G4S fell 1.4 percent after the Financial Times reported the global security company is under further pressure as a British government-funded watchdog agreed to investigate its activities in Israel and the Palestinian territories.

On the other hand, British plumbing supplies group Wolseley (Frankfurt: 24W2.F - news) rose 3 percent, the top FTSE 100 gainer, after posting a 5.1 percent rise in third-quarter like-for-like revenue and saying it expected its revenue to grow about 4 percent in the next six months. (Editing by Janet Lawrence)