ARM leads FTSE lower; investors cautious before Scotland votes

* FTSE 100 down 0.2 pct

* Chip designer ARM tracks U.S. peers lower

* Holiday operator Thomas Cook (Xetra: A0MR3W - news) hit by German headwinds

* Pearson (Xetra: 858266 - news) up on Morgan Stanley (Xetra: 885836 - news) upgrade -traders

By Tricia Wright

LONDON, Sept 16 (Reuters) - Britain's top share index crept lower on Tuesday, led by falls in chip designer ARM Holdings (LSE: ARM.L - news) , with investors reluctant to place big bets before Scotland's independence referendum on Thursday.

Caution over the U.S. Federal Reserve's two-day policy meeting, which starts on Tuesday, was also likely to keep market moves in check. Investors were seeking clues on the likely timing of the first U.S. rate hike in more than eight years.

ARM Holdings shed 2.4 percent in brisk trade, with traders citing a read-across from the United States, where the technology-heavy Nasdaq index suffered its worst day since July as investors cleared the decks for Alibaba's debut planned for later this week.

Also ARM, which supplies Apple (NasdaqGS: AAPL - news) , saw good gains into the U.S. firm's recent unveiling of a watch, two larger iPhones and a mobile payments service last week. They have since come under some selling pressure.

"I think the iPhone 6 launch was largely a bit disappointing and as they (ARM) are the only real exposure to the U.S. tech sector/Apple in the FTSE 100, they are bearing the brunt of it all," said Ed Woolfitt, head of trading at Galvan.

Trading volume in ARM stood at a third of its 90-day daily average, against that on the broader FTSE 100 at 15 percent.

The UK benchmark was down 13.85 points, or 0.2 percent, at 6,790.36 points by 0817 GMT, extending its retreat from this month's 14-1/2 year high of 6,904.86. The index closed flat on Monday.

The index was little moved by data showing British inflation edged down last month.

The market was on tenterhooks ahead of the Sept. 18 referendum on independence for Scotland, with opinion polls suggesting the referendum remains too close to call. Investors were reluctant to place big bets for now.

"We are sitting on the sidelines at the moment, and although we are cautiously optimistic Scotland will not exit the Union, it just isn't worth the risk building positions in UK stocks until after the vote," said Mark Ward, head of trading at Sanlam Securities.

Elsewhere among fallers, holiday operator Thomas Cook flagged headwinds in its key German market, sending its shares down 6.2 percent and leading the FTSE 250 index lower .

Meanwhile, small-cap online-fashion retailer ASOS dropped 10.2 percent, hit by a 2014-2015 profit downgrade.

Among brighter spots, publishing group Pearson advanced 2.2 percent, hitting its highest level since January and topping the blue-chip leader board, with traders citing a Morgan Stanley recommendation upgrade to "overweight". (Editing by Hugh Lawson)