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UPDATE 2-FTSE 100 records worst week since mid-August as recovery slows

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* COVID-19 Delta spread slows UK economic recovery in July

* FTSE 100, FTSE 250 down 1.5% and 1.9%, respectively, for week

* British Airways owner IAG slips on CS’s price target cut

* FTSE 100 up 0.1%, FTSE 250 off 0.3% (Updates to close)

Sept 10 (Reuters) - The FTSE 100 ended higher on Friday, but posted its worst weekly performance since mid-August as data showed the pace of domestic economic recovery stalled in July against the backdrop of a surge in COVID-19 cases and supply chain disruptions.

The blue-chip index ended 0.1% up with miners leading the gains, while the domestically focused mid-cap FTSE 250 index dropped 0.3% weighed by real estate and financial stocks.

Wider mining index added 1.5% and was the best performing sub-sector index with stocks including Rio Tinto , Glencore and Anglo American up between 1.2% and 1.8%.

Economic output rose just 0.1% in July, the Office for National Statistics said, the smallest monthly increase since January when Britain went into a new national lockdown. .

“Isolation rules have been relaxed...The vaccination roll out has continued apace and Delta appears to have been kept at bay, at least for now. August’s figures will be coloured by the bright palate of summer, but September seems to have brought a new term full of old normals,” said Danni Hewson, financial analyst at AJ Bell.

A resurgence in COVID-19 cases globally has sparked fresh worries about whether the vaccine-backed economic recovery can be sustained, with the FTSE 100 and the FTSE 250 down about 1.5% and 1.9%, respectively, for the week.

Meanwhile, a Reuters poll found the Bank of England will raise borrowing costs by end-2022, earlier than previously thought, with a chance it may come even sooner as a solid pandemic recovery and high inflation may tip the bank’s hand.

All eyes will be on Britain’s job data for July as those figures will show the extent of labour shortage in the nation amid employers struggling to find job candidates.

British airways owner IAG slipped 4.1% after Credit Suisse cut its price target on the stock.

French luxury group LVMH gained 0.8% after HSBC upgraded the stock to “buy” from “hold”. Rival Burberry Group added 0.5%. (Reporting by Devik Jain and Amal S in Bengaluru; Editing by Shounak Dasgupta and Devika Syamnath)

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