* FTSE 100 edges down 0.2 pct
* Mining stocks hit by fall in iron ore prices
LONDON, Aug 28 (Reuters) - Britain's top equity index edged down on Thursday from its highest closing level in nearly two months, as a fall in the shares of top mining companies weighed on the stock market.
The blue-chip FTSE 100 index, which on Wednesday had risen to its highest closing level since early July, retreated by 0.2 percent, or 10.15 points, to 6,820.51 points in early session trading.
The FTSE 350 Mining Index fell 1.2 percent, with miner Rio Tinto weakening by 2.5 percent as the sector was hit by a drop in iron ore prices in China, which is the world's biggest metals consumer.
The FTSE has risen by more than 4 percent over the past 2-1/2 weeks, boosted by speculation of new stimulus measures from the European Central Bank to boost the euro zone's struggling economy.
The index hit a peak this year at 6,894.88 points in mid-May, which marked its highest level since December 1999.
However, it has not yet got past the 6,900 point level - seen as a key hurdle to breach before the FTSE can then challenge record highs at the 7,000 point area.
Kyri Kangellaris, managing director at Strand Capital, said he would look to "short" the FTSE at current levels - namely take bets on a pull-back.
"I think it's a pretty good shorting opportunity at these levels," he said.
Adrian Slack, technical strategist at Novum Securities, was more confident, saying any pull-back on the FTSE should be relatively short-lived.
"I think we're just pausing for breath before we go higher at the end of the year. The downside looks pretty limited," said Slack. (Reporting by Sudip Kar-Gupta; Editing by Toby Chopra)