By Polya Lesova, MarketWatch

LONDON (MarketWatch) -- London's benchmark stock index declined on Friday, weighed down by the mining sector, while shares of technology firm ARM Holdings PLC rallied.

The FTSE 100 index slipped 0.9% to 5,972 at late morning.

Mining shares pressured the FTSE, as gold, silver and other metal prices traded lower. Copper miner Antofagasta PLC fell 2.2% and diversified mining group Xstrata PLC sank 2.8%.(INTC)

Mining giant BHP Billiton PLC also fell, down 2.2%.

Silver miner Fresnillo PLC erased earlier gains to trade down 2.2% as well. Its shares had gained earlier after the company reported record levels of gold and silver production for 2010 and gave an upbeat outlook for output this year.

Another top decliner in the FTSE was British Airways PLC , whose shares fell 2.1%.

Also on the downside, shares of wireless-telecommunications provider Inmarsat PLC dropped 2% following a negative U.S. regulatory ruling on LightSquared's spectrum plans. As a result, near-term prospects for triggering of the second phase in LightSquared's cooperation agreement with Inmarsat are less likely, Morgan Stanley said.

"Our estimate of a full $115 million in revenue contribution from LightSquared in 2011 now appears too optimistic," the broker added.

Analysts also weighed in on Meggitt PLC , shares of which fell 2.3%. UBS downgraded the aerospace and defense firm to neutral from buy, saying the business outlook is now broadly priced into the share price.

Bucking the negative trend, ARM Holdings (ARMHY) was the top gainer in the FTSE, rallying 6%. The gains followed strong financial results from U.S. chip giant Intel Corp. (INTC), which reported a surge in fourth-quarter profit late Thursday.

Smith & Nephew in spotlight

Shares of medical-device maker Smith & Nephew PLC (SNN) gained 0.8% to 690 pence in volatile trading. They had rallied earlier to an intraday high of 716 pence.

The company said Friday it is not engaged in any discussions which could lead to a merger or a takeover. The statement followed recent press speculation regarding deal talks. (SNN)

The Daily Telegraph newspaper, without citing sources, reported Friday that the U.K. firm was set to start informal talks with U.S.-based Biomet, a privately held company, about what would be a possible 15 billion pound ($23.8 billion) merger.

Also, health-care giant Johnson & Johnson (JNJ) has been rumored to be interested in Smith & Nephew.