FTSE: 5,362.94 (-60.20) Mid-250: 10,044.36 (-105.92) Small Cap: 2,765.88 (-16.38)UK STOCKS declined for a fifth day, their longest stretch of losses in six weeks, after Germany and France differed on the European Central Bank's role in containing the sovereign-debt crisis.

Chemring Group, a maker of missile-avoidance gear, slumped the most in 14 years as profit missed estimates. Aviva, the second-biggest British insurer, slid 1.8 per cent after selling bonds.

Capita Group lost 4 per cent after the provider of criminal records services for the UK Home Office said it expects 2011 revenue to decline.

The benchmark FTSE 100 Index dropped 60.2, or 1.1 per cent, to 5,362.94 at the close in London. The gauge has fallen every day this week, extending this years losses to 9.1 per cent, as the borrowing costs for Italy and Spain surged. The FTSE All-Share Index also slipped 1.1 per cent.

“Markets are still troubled by the idea of contagion from the debt crisis to the rest of the world,” said Morten Kongshaug, chief equity strategist at Danske Bank A/S in Copenhagen.

German chancellor Angela Merkel rejected French calls to deploy the ECB as a crisis backstop, defying global leaders and investors calling for more urgent action to halt the turmoil.

She listed using the ECB as lender of last resort alongside joint euro-area bonds and a “snappy debt cut” as proposals that won’t work.

Europe is running out of options to fix its debt crisis and it is now up to Italy and Greece to convince markets they can deliver the necessary austerity measures, Finnish prime minister Jyrki Katainen said.

Chemring lost 14 per cent to 415.1 pence, the largest decline since 1997. The company said full-year revenue was 745 million pounds ($1.18 billion), 5 per cent less than management expectations, leaving operating profit below analyst estimates.

Aviva slid 1.8 per cent to 291.8 pence after selling 30-year bonds worth $400 million, which the insurer will spend on general corporate purposes.

Capita dropped 4.1 per cent to 640 pence after the services company said it expects “organic revenue” to slip 7 per cent for the full year.

Arm Holdings fell 3.9 per cent to 598 pence. The maker of processor chips for Apple Inc’s iPhone expects slower growth in research spending in 2012, the Wall Street Journal reported. – (Bloomberg)