Blue-chip shares closed below the 7000 mark dragged down by disappointing US growth data and continuing uncertainty over the Greek debt crisis.

The FTSE 100 Index slipped 56.5 points to 6984.4, after official figures revealed the US economy actually shrank at a 0.7 per cent annual rate in the first three months of the year, depressed by a severe winter and a widening trade deficit.

Markets in France and Germany posted sharp declines after hopes this week of an imminent deal between debt-laden Greece and its creditors were tempered.

Fears over the crisis worsened after Christine Lagarde, managing director of the International Monetary Fund, told a German newspaper that a Greek exit from the eurozone was a possibility.

Despite the anxiety, the pound was a cent lower against the euro, at 1.39, amid signs from Spain and Italy that deflationary pressures in the single currency area may be easing. Sterling was also a cent lower against the dollar, at just under 1.53.

In London, a thin session for corporate updates saw Weir post a strong performance on the top flight leaderboard after analysts at Credit Suisse raised their target price on the engineering group. Shares rose two per cent, or 48p, to 2024p.

Primark owner Associated British Foods topped the leaderboard, also lifted by a broker note, with Goldman Sachs upgrading it to buy from sell, pointing to a bumper rise in earnings expected from the clothing retailer's entry into the US market.

The stock added more than two per cent, or 78p, to 3028p.

Mobile phone giant Vodafone was ahead too, after it sold its 4.2 per cent stake in Indian telecoms infrastructure firm Bharti Airtel for 200 million US dollars (£131 million) to parent firm Bharti Enterprises. Shares rose 1.7p to 255.4p.

Among the fallers was British Airways owner International Airlines Group - as it edges towards a takeover of Ireland's Aer Lingus after approval by the Irish government and the carrier's board.

Low-cost rival Ryanair, with a 29.8 per cent stake in Aer Lingus, has become kingmaker in the deal, but has been holding its cards close to its chest as IAG has insisted it will not up its £1 billion offer.

IAG shares fell 15p to 554p. Ryanair was also down 26 cents (19p) to €11.6 euros (834p).

Ashtead, the equipment rental group, was lower after downbeat remarks by executives at a US rival, United Rentals, about business softness this month. Shares fell 41p to 1120p. Most of Ashtead's revenues come from the US market.

The biggest risers on the FTSE 100 Index were Associated British Foods up 78p at 3,028p, Fresnillo up 19p at 759.5p, Weir Group up 48p at 2024 and Randgold resources up 53p at 4735p.

The biggest fallers on the FTSE 100 Index were Ashtead down 41p at 1120p, Morrisons down 6p at 171p, AstraZeneca down 119.5p at 4372.5p and International Airlines Group down 15p at 554p.