By Francesco Canepa
LONDON (Reuters) - The FTSE 100 snapped a three-day losing streak on Friday, led by ARM Holdings on speculation the chip-maker may secure a new contract from U.S. internet firm Google.
Despite the small gains on Friday, the FTSE 100 was still on track for its sixth consecutive weekly loss, its worst run since 2008, as concerns about a tightening of U.S. monetary policy and a stronger pound clouded the outlook for the many globally exposed companies in the British index.
Clipping the index's wings was insurer RSA, which slumped 17.8 percent to its lowest level since around mid-2005 after its chief executive resigned following its latest profit warning.
ARM led the rebound on Friday, rising 4.1 percent, with traders citing a Bloomberg report suggesting that Google is considering making its own server processors using technology from the British chip maker.
"If they (Google) do start making their own server chips, that would put upward pressure on the royalty shipments for ARM in due course," said Julian Yates, who covers the company for Investec.
"It's positive sentiment for the stock."
The FTSE 100 index rose 0.2 percent to 6,456.24 points at 1139 GMT after hitting its lowest level since around mid-October at 6,434.07 in early deals.
Volume on the stock was already more than five times its full-day average for the past three months, compared to a third of the average for the FTSE.
"This is clearly a very disappointing announcement for the company leading to uncertainty about ongoing profitability, capital levels, dividends and strategy," said Oriel Securities analyst Marcus Barnard.
The FTSE 100 is up by around 9 percent since the start of 2013 but has lost ground this week due to lingering uncertainty over when the U.S. Federal Reserve may scale back its economic stimulus measures.
The Fed meets next week, and while most investors still don't expect it to start tapering its economic stimulus programme until March next year, some believe it could begin this month.
This uncertainty has led some investors to trim back equity holdings this month in order to book profits on the year's gains.
The FTSE has also been held back by mining stocks, which have underperformed due to lingering concerns about a possible economic slowdown in China.
"The miners haven't performed, and for the FTSE, that's a big deal," said Toby Campbell-Gray, head of trading at Tavira Securities.
Campbell-Gray does not expect the FTSE to make much headway for the rest of 2013, but sees it rising 10 to 15 percent in 2014 as the UK's economic recovery continues.
(Additional reporting by Sudip Kar-Gupta, Tricia Wright; Editing by Ruth Pitchford)