Britain's top shares fell on Friday as investors shunned riskier assets while Europe struggled to prevent its debt situation from worsening, as global austerity measures had an impact on corporates.

Capita was the biggest casualty in London as the outsourcing firm said it was feeling the pinch with clients curbing their spending in the face of UK austerity measures, as global governments battle to deal with their debt.

Capita shares sank 4.3 percent after it said it will only deliver reasonable 2011 revenue growth, prompting Oriel Securities to repeat its reduce rating on the stock.

And mid-cap Chemring dropped 14.5 percent to a one-month low after the military equipment maker said annual revenues will likely miss its expectations due to order delays and that 2012 will be tough as uncertainty around global military spending continues.

Banks <.FTNMX8350> fell sharply as Spanish and Italian bond yields remained at inflated levels. Lloyds Banking Group shed 3 percent, while Barclays and Royal Bank of Scotland both fell 2.2 percent.

I see all the equity traders have suddenly got bond yields up on their screens which never happened before and now is the main focus, Joe Rundle, head of trading at ETX Capital, said.

Until we get some sort of coherent measure to deal with the euro zone... the market's going to just keeping pushing these yields higher.

A disappointing sovereign debt auction in Spain on Thursday served to heighten concerns over the European debt crisis, ahead of the country's parliamentary election on Sunday.

And while new Italian Prime Minister Mario Monti pledged on Thursday to take action to tackle the country's debt problems, investors remained nervous as euro zone governments struggle to raise funds and banks refrain from lending.

This continuous trickle of negative news very much seems like death by a thousand cuts, with no remedy in sight, Zahid Mahmood, senior dealer at Capital Spreads, said.

He added that there is every chance the market will remain in negative territory today given there is very little in the way of key economic news and, under such circumstances, markets tend to continue along their recently established trends.

There is nothing in the way of major domestic economic data scheduled for release in the UK on Friday, while U.S. data includes October lead indicators, due at 1500 GMT.

The UK benchmark <.FTSE> was down 43.80 points, or 0.8 percent, at 5,379.34 by 0918 GMT, after posting its fourth successive day of losses on Thursday, closing down 1.6 percent.

In an indication of investors' attitude towards risk, all of the four FTSE 100 gainers were defensive.

National Grid , GlaxoSmithKline , Imperial Tobacco and SSE rose 0.1-0.4 percent.

(Additional reporting by David Brett; Editing by Mike Nesbit)