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* FTSE 100 down 0.5 pct
* ICAP, Tullett Prebon fall on transaction tax talk
* ENRC firms as profit climbs
By Tricia Wright
LONDON, Aug 17 (Reuters) - Weak financial stocks dragged Britain's top shares lower on Wednesday after a summit between French president Nicolas Sarkozy and German chancellor Angela Merkel disappointed investors anxious about the euro zone debt crisis.
"I think there's nervousness out there. Basically that meeting's out of the way. We were all on hold ahead of that. It was disappointing," David Morrison, market strategist at GFT Global, said.
Merkel and Sarkozy's meeting did not end in an agreement for creating a common euro zone bond, or to increase the size of the European Financial Stability Facility.
They did, however, unveil a plan to explore a financial transaction tax (FTT), which had a negative knock-on impact on financial stocks.
Interdealer brokers ICAP and Tullett Prebon were among the top fallers on the FTSE 100 and FTSE 250 indexes respectively, off 4.3 percent and 4.1 percent.
On the second line, London Stock Exchange shed 4.7 percent, and spread-betting firm IG Group dropped 4.4 percent.
"One of the intended purposes of the financial transactions tax would be reduce trading volumes. This would be negative for businesses which thrive on the flow of financial transactions, such as IG," Collins Stewart said.
UBS played down the probability of a FTT being backed by Britain "which would suffer most given its exposure to the financial sector".
As a sector, banks were the biggest drag on the UK benchmark index , which shed 25.18 points, or 0.5 percent, to 5,332.45 by 1111 GMT, having earlier dipped below the psychologically important 5,300 level.
The FTSE 100 was on track to snap a four-session winning streak which has seen the index jump 7 percent.
As gold edged higher for a third day, with safe-haven demand for bullion supported by uncertainty surrounding the euro zone debt situation, buyers came in for precious metals miners.
Fresnillo was a top blue-chip riser, up 1.8 percent despite trading ex-dividend, while Randgold Resources firmed 0.7 percent.
Adding to investor jitters, the UK jobless rate unexpectedly rose to 7.9 percent, compared with forecasts for an unchanged reading of 7.7 percent, while British jobless claims jumped by the most in over two years.
UBS on Wednesday cut its 2011 year-end target for the FTSE 100 to 6,100 from 6,700.
"Markets face multiple headwinds: an ongoing sovereign credit crisis in Europe, political challenges in the U.S., and a re-opening of the debate on whether we are at a low point in the normal cycle," the broker said.
Bank of England minutes showed its Monetary Policy Committee voted 9-0 to keep interest rates at a record low 0.5 percent at its August meeting after last month voting 7-2 in favour of keeping rates on hold.
BoE policymakers Spencer Dale and Martin Weale ditched their calls for higher rates this month, as the committee judged that the economic outlook had worsened over the past month, and most members felt risks to inflation had eased.
Back among the risers, Eurasian Natural Resources firmed 2.2 percent, outperforming slightly firm sector peers , after it posted first-half profit at the top end of expectations.
Elsewhere, global brewer SABMiller climbed 0.8 percent after taking its $10 billion bid direct to Foster's shareholders, with Investec Securities repeating its "buy" rating on SABMiller.
"The bid will no doubt resurface the market's concerns over the potential dilution of SAB's emerging market proposition, though we remain qualifiedly positive at this stage," Investec said.
"SAB clearly feel confident they can not only force the issue with a re-iterated offer, but crucially, that they can transact at the initial price, eliminating some downside risk of overpaying," the broker said.
GKN bounced 1.7 percent higher, almost recouping Tuesday's 1.9-percent decline, with traders citing the benefits of the British automotive and aviation parts manufacturer's inclusion in the MSCI United Kingdom Index .
Ex-dividend factors knocked 9.48 points off the FTSE 100 index on Wednesday, with Anglo American , British American Tobacco , Fresnillo , Hammerson , HSBC , Pearson , Prudential and Standard Life all losing their payout attractions. (Additional reporting by David Brett and Jon Hopkins; Editing by Hans-Juergen Peters)
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