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* FTSE 100 down 0.1%, FTSE 250 flat

* UK services Inflation drops to 5.7% vs estimates of 5.5%

* Spectris warns of downbeat annual profit, shares fall

* UK headline inflation at 2%

June 19 (Reuters) - London stocks edged lower on Wednesday as investors juggled Britain's headline inflation hitting the Bank of England's (BoE) target against a sluggish drop in services price inflation.

The blue-chip FTSE 100 was down 0.1% at 8,180.42 points, while the mid-cap FTSE 250 was flat at 20,410.28 points. The pound gained 0.1% against the dollar and was last at $1.2728.

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

"Markets are seeing a bit of indigestion on the details of the inflation report pushing back expectations of a first rate cut," Ben Laidler, global markets strategist at eToro, said.

Data showed services price inflation at 5.7%, compared with a Reuters poll of economists who expected 5.5%.

Investors are now pricing in a roughly 30% chance of an August rate cut, down from nearly 50% before the data.

"If this stickiness in domestic price pressures continues, alongside ongoing resilience in economic activity, an August rate cut could well be off the table too," Zara Nokes, global market analyst at J.P. Morgan Asset Management, said.

Meanwhile, headline inflation returned to the BoE's target of 2%.

The central bank is expected to announce its policy decision on Thursday.

Among individual stocks, Segro lost 1.2% after Jefferies downgraded the stock to "hold" from "buy".

Spectris dropped 8.2% after the scientific instruments-maker warned of lower-than-expected profit on weak China demand.

Telecom infrastructure firm Helios Towers was the top loser on the mid-cap index, falling 8.4% after a discounted secondary share placement.

Anglo American gained 1.5% after the miner said it expects a 30% decline at its key Chile copper mine in 2025.

U.S. markets are shut for a public holiday on Wednesday. (Reporting by Pranav Kashyap in Bengaluru; Editing by Mrigank Dhaniwala and Sonia Cheema)