By Kit Rees and Alistair Smout
LONDON (Reuters) - Britain's top share index edged down on Wednesday from its highest close this year, hit by a drop in financial stocks and a tumble in Paddy Power Betfair (L:PPB).
The FTSE 100 (FTSE) was down 6.77 points, or 0.1 percent, at 6,398.58 points by 1155 GMT, having closed at 6,405.35 in the previous session - the index's highest close since Dec. 3.
The index is up around 16 percent from 3-1/2 year lows in February, but remains down 10 percent from an all-time high hit a year ago.
Top individual faller was Hargreaves Lansdown (LON:HRGV), down 3.5 percent. Financials in general trimmed 2.5 points off the market, in keeping with the day's 'risk-off' tone.
Traders also cited Swiss peer GAM's poorly received results as having an impact on the UK sector. It said turbulent market conditions were likely to continue to weigh on client sentiment and flows in the near term.
Bookmaker Paddy Power Betfair was another big faller, dropping over 3 percent after Credit Suisse (SIX:CSGN) began its coverage of the stock with an "underperform" rating.
The investment bank cited concerns that benefits from a merger between Paddy Power and Betfair were overplayed, and said the share price reaction was overdone.
"With regards to Paddy Power and Betfair, as both companies already had strong brands, high quality management teams and good product/technology offerings, we question the extent of the benefits from a merger," Credit Suisse analysts said in a note.
Among mid-cap companies, plus-size fashion retailer N Brown (L:BWNG) slumped over 14 percent and is set for its biggest daily loss in more than a year after reporting weak results for the first quarter.
Mining companies, however, were among the top risers on a series of price target upgrades from Investec, which said a bottom of the market had been tested and found.
Anglo American (L:AAL) climbed 5.9 percent while Antofagasta (L:ANTO), BHP Billiton (L:BLT), Rio Tinto (L:RIO) and Glencore (L:GLEN) all gained between 0.9 percent to 2.7 percent.
Chip designer ARM (L:ARM) rallied as well, up over 2 percent after it beat forecasts with a 14 percent rise in quarterly profit.
"ARM's Q1 results were solid ... driven by strong out-performance (10 percent) for processor licensing revenue," analysts at UBS said in a note.
"The strength in licensing bodes well for medium term royalty revenue which has been a wider concern for potential investors in our view and supports our positive investment thesis."
Product testing firm Intertek (L:ITRK) gained over 3 percent after investment bank Morgan Stanley (NYSE:MS) raised its rating to "equal weight" on the stock.