* FTSE 100 index down 0.2 percent
* Mixed bag of blue chip results dominant
* Drax plunges on UK government renewables move
By Jon Hopkins
LONDON July 25 (Reuters) - Britain's top share index fell back on Wednesday, extending recent sharp falls into a fourth straight session, driven by a batch of blue chip earnings, with BT Group and Johnson Matthey big fallers as their latest updates failed to impress.
ARM Holdings and Capita got a boost from well-received results but the market overall was tracking declines on Wall Street and in Asia as worries that Spain may need a full debt bailout continued to dog global markets.
At 0806 GMT, the FTSE 100 index was down 9.63 points, or 0.2 percent at 5,48.60, having closed 0.6 percent lower on Tuesday to end below the 5,500 level for the first time since June 28.
BT was the biggest blue chip casualty, down 4.9 percent, sliding to its lowest level in nearly a month as the telecom group's first quarter results came in below analysts' forecasts.
"An element of today's share price reaction may be down to profit taking, following a 10 percent rise for the shares over the last year, as compared to a 7 percent dip for the wider FTSE100. When the dust settles after a mildly disappointing update, the market consensus of the shares as a buy should remain intact," said Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers.
ARM Holdings was the top FTSE 100 gainer, ahead 3.7 percent as the chip designer's Q2 results beat market expectations as demand for its low power chips in smartphones and tablets continued to outstrip the industry. [ID: nASM0003CK]
Scottish & Southern Energy was also a big blue chip faller, down 4.9 percent as the stocks traded without entitlement to its latest dividend on Wednesday, with the ex-dividend move knocking 2.09 points off the FTSE 100 index.
SSE also suffered in tandem with power station operator Drax on competition concerns after the UK government on Wednesday announced a 10 percent cut in subsidies for onshore wind farms, sticking to a reduction announced on October and surprising investors who had expected a steeper reduction after months of delays to the announcement.
Drax was the biggest FTSE 250 faller, slumping 21 percent on the move, with analysts highlighting the impact of changes to the renewable power generation (ROC) allowances for co-firing biomass material in its coal plant.
"Apart from the lower value from the biomass uplift, of greater concern for the shares in our view is whether Drax would continue pursuing the biomass change. With no support for the biomass transformation, the strategic value of Drax being future clean generation is also called into question," Goldman Sachs said in a note.
Investors were also cautious ahead of the release of the first-revision to UK second-quarter GDP data, due at 0830 GMT.
More information on the state of the British economy will also come from July's Confederation of British industry (CBI) trends-orders survey, due at 1000 GMT.
"With the global picture looking increasingly gloomy it is difficult to find any other economic drivers which would support any move higher. With too much uncertainty out there as we enter the quietest trading period of the year expect the volatility to be severe," said Mike McCudden, Head of Derivatives at Interactive Investor. (Reporting by Jon Hopkins. Editing by Jeremy Gaunt.)