Britain's top shares were lower on Friday morning, baulking after testing the 5,800 level in the previous session, as talks between Greece and its private creditors fell under the spotlight.

The London benchmark <.FTSE> shed 16.85 points, or 0.3 percent, to 5,778.35 by 0925 GMT, having advanced 1.3 percent on Thursday to close at 5,795.20.

Traders said fears surrounding debt-stricken Greece were hampering the FTSE 100's progress. The index, which shed 5.6 percent in 2011, has risen 3.7 percent so far this year.

Greece's tortuous negotiations over its debt restructuring resume on Friday, with Athens requiring a deal quickly to avoid a messy default when a major bond redemption comes due in March.

Ultimately I do think a deal will be done, but the longer it drags on, the more jittery the markets will get, Manoj Ladwa, senior trader at ETX Capital, said.

On Thursday, Greece and its private creditors did manage to make progress in the debt restructuring talks, both sides said.

Among individual movers, heavyweight BP made the biggest dent in the index, off 1.3 percent and taking five points off the FTSE 100, after a U.S. judge ruled it must indemnify Transocean Ltd for some compensatory damage claims over the 2010 Gulf of Mexico oil spill.

Its sector peers <.FTNMX0530> were also pressured, along with other economically sensitive stocks such as miners <.FTMNX1770> and banks <.FTNMX8350>, as risk appetite, boosted earlier this week when the U.S. Federal Reserve pledged to support economic growth, receded.

Traders also blamed this change in attitude on worries about Portugal, seen as the next potential domino in the euro zone's debt crisis.

Even with small amounts of good news filtering through we cannot seem to have a convincing break and hold new highs, said Atif Latif, director of equities and derivatives at Guardian Stockbrokers.

Until this pattern is confirmed and the EU contagion fears ease, investors continue to add aggressive downside protection.

Defensive tobacco and pharmaceutical stocks, which tend to enjoy strong demand regardless of the macroeconomic backdrop, saw relatively good demand, led by Imperial Tobacco , the top blue-chip riser.

Comments from Citigroup helped support the cigarette maker, which rose 1.4 percent, with the bank lifting its target price on the stock to 2,570 pence from 2,550, as it repeated its buy rating, saying recent share price weakness has been overdone.

Intercontinental Hotels , meanwhile, was the biggest blue-chip faller, down 2.5 percent, after UBS cut its rating on the hotelier to sell from neutral, following its recent strong gains. Since November, IHG has risen 35 percent.

We remain relatively cautious on European hotel stocks for 2012. We currently expect modest positive RevPar (revenue per average room) growth in 2012-13, but uncertainty remains and the slowing occupancy growth has often historically led to stock underperformance, UBS said in a note.

U.S. growth figures, out at 1330 GMT, are the main focus in terms of macro data on Friday, with economists estimating GDP grew at a 3.0 percent annual pace in the October-December period, according to the median forecast in a Reuters poll.

That would be a step-up from the third quarter's 1.8 percent rate and it would be the quickest pace since the second quarter of 2010.

(Editing by Helen Massy-Beresford)