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Updated at 1550 GMT

By Purvi Agarwal and Pranav Kashyap

July 2 (Reuters) -London's benchmark stock index closed at more than a two-month low on Tuesday as investors were cautious ahead of parliamentary elections, although an uptick in oil prices helped offset the declines.

The blue-chip FTSE 100 .FTSE fell 0.6% at 8,121.2, while the mid-cap FTSE 250 .FTMC was off 0.1%. The pound <GBP=D3>gained 0.2% against the dollar andwas last at $1.2676.

Markets were clouded with caution as polls suggested the Conservatives looked set to be replaced after 14 years invoting on July 4.

"Financial markets don't like uncertainty... there is still an uncertainty as to Labour getting an absolute majority or not and therefore, investors have just taken money off the table," said Axel Rudolph, senior market analyst at IG Group.

Among sectors, nonlife insurers .FTNMX303020 fell the most, dropping 2.5%, as Hurricane Beryl intensifies.

Insurer Beazley BEZG.L was the biggest casualty on the FTSE100, losing 5.2%, and leading declines for the nonlife insurers.

Oil giant BP BP.L gained 1.3% after oil prices CLc1, LCOc1 held near two-month highs on expectations of rising fuel demand forthe summer travel season and possible U.S. interest rate cuts. O/R

GSK GSK.L slipped 1.5% after a Delaware judge rebuffed a request by the drugmaker and others to appeal a ruling allowing over 70,000 lawsuits to go forward claimingthe heartburn drug Zantac caused cancer.

Sainsbury's SBRY.L, Britain's second largest supermarket group, fell 2.9% after it kept its annual financial guidance as it reported a 3% rise in first-quarter underlying sales.

Across the Atlantic, Federal Reserve Chair Jerome Powell said the U.S. central bank still needs more data before cutting interest rates to ensure that recent weaker inflation readings give a true picture.

U.S. job openings increased in May after posting outsized declines in the prior two months, data showed.

Reporting by Purvi Agarwal, Roshan Abraham and Pranav Kashyap in Bengaluru; Editing by Mrigank Dhaniwala and Chris Reese

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