Afternoon market: FTSE 100 drops below 5,400 for first time in a month

The FTSE 100 index closed below 5,400 for the first time in a month, as German leader Angela Merkel stood firm on her stance that the European Central Bank would not become a lender of last resort.

After meeting British prime minister David Cameron for talks over the eurozone situation, the German chancellor said the European Union treaty prevented the central bank from being a lender of last resort.

The blue chip index closed 0.83% lower at 5,378.

The biggest loser was Capita Group, dropping 4.1% to 640p, after earlier publishing its interim management statement.

It says: “We expect to achieve reasonable revenue growth and stable year on year margins for the full year 2011.

“Our strong major contracts sales performance, the contribution from acquisitions in 2011 and our buoyant bid pipeline will support stronger revenue growth in 2012.”

Global satellite communications company Inmarsat slipped 4% to 419.5p, microchip manufacturer Arm Holdings was down 3.9% to 598p, engineer Weir Group dropped 3.7% to 1,783p, and commodities trader Glencore International fell 3.4% to 398.7p.

The biggest climber was cruise company Carnival up 1.7% to 2,086p, International Consolidated Airlines Group rose 1.1% to 143p, as broadcaster ITV increased by 1% to 64.15p.

Interdealer broker ICAP climbed 1% higher to 344.5p and RSA Insurance was up 0.8% to 107.9p.

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