Britain's FTSE edges down from highest close of 2016

* FTSE 100 down 0.1 pct

* Hargreaves Lansdown (LSE: HL.L - news) leads financials lower

* Paddy Power Betfair falls on downgrade

* ARM rises after results (Recasts, adds detail and quote, updates prices)

By Kit Rees and Alistair Smout

LONDON, April 20 (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 .

The FTSE 100 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, 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 (Other OTC: ITGL - news) 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 (LSE: 0QP5.L - news) began its coverage of the stock with an "underperform" rating.

The investment bank cited concerns that benefits from a merger between Paddy Power (LSE: PAP.L - news) and Betfair were overplayed, and said the share price reaction was overdone.

"With (Other OTC: WWTH - news) 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 (LSE: BWNG.L - news) 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 (LSE: INVP.L - news) , which said a bottom of the market had been tested and found.

Anglo American (LSE: AAL.L - news) climbed 5.9 percent while Antofagasta (LSE: ANTO.L - news) , BHP Billiton (NYSE: BBL - news) , Rio Tinto (LSE: RIO.L - news) and Glencore (Amsterdam: GX8.AS - news) all gained between 0.9 percent to 2.7 percent.

Chip designer 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 (LSE: 0QNR.L - news) 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 gained over 3 percent after investment bank Morgan Stanley (Xetra: 885836 - news) raised its rating to "equal weight" on the stock.

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If you have any thoughts, suggestions or feedback on this, please email mike.dolan@thomsonreuters.com.

Mike Dolan, Markets Editor EMEA. (Reporting by Alistair Smout; Editing by Mark Potter)