Britain's FTSE falls to 2-1/2 week low, hit by banks and tech

* FTSE 100 (NasdaqGS: Z - news) down 1.9 pct

* ARM falls on sector concerns

* HSBC down after settlement

* Randgold rallies on results

By Kit Rees

LONDON, Feb 8 (Reuters) - Britain's top share index fell on Monday to its lowest level since Jan. 21, weighed down by banking and tech stocks.

The blue-chip FTSE 100 index slipped 1.9 percent to 5,736.15 points by 1011 GMT, slightly outperforming the European market. The index has already shed 5.7 percent this month.

"This is a downtrending market so, for the time being, that 5900.00 level for the FTSE - we seem to be leaving it behind us now," said Brenda Kelly, head analyst at London Capital Group.

HSBC Holdings (HKSE: 0005-OL.HK - news) fell 3.8 percent, taking around 13 points off the index and touching its lowest point since April (LSE: 0N69.L - news) 2009.

Traders said concerns over bank margins in a negative interest rate environment were hurting the bank sector after central banks in Europe and Japan delivered dovish messages in January. Worries over a possible British vote to leave the European Union later this year were also weighing.

After the market closed on Friday, it was announced that HSBC was going to pay $470 million to settle parallel U.S (Other OTC: UBGXF - news) . federal and state civil charges alleging the bank's mortgage servicing arm engaged in abusive foreclosure and loan origination practices.

Chip maker ARM Holdings (LSE: ARM.L - news) was down 5.4 percent after several brokers reiterated their "neutral" ratings for the company ahead of its full-year earnings release on Wednesday.

Concerns regarding a slowdown in the the U.S. tech sector after Apple (LSE: 0R2V.L - news) forecast its first revenue drop in 13 years at the end of January have hit shares of ARM Holdings, whose technology powers Apple's iPhone.

A downgrade to "hold" from Investec (Other OTC: ITCFY - news) put pressure on shares of WPP (Swiss: OXWPP.SW - news) , the world's largest advertising company, which slid 3.5 percent, on track for its sixth straight session of losses.

Investec cautioned that there was an increased risk to global GDP expectations and agencies could de-rate quite aggressively in tougher times.

Worries over a dividend cut weighed on the shares of British aero-engine company Rolls-Royce, which fell 3.7 percent ahead of its full-year results due on Friday.

In November the company warned it could cut its dividend, when it issued its fourth profit warning in just over a year after taking a hit from low oil prices and a slowdown in aero-engine servicing.

Among the gainers, investors were cheered by precious metals miner Randgold Resources' strong set of full-year earnings, with the shares rallying 2.6 percent.

The company said its full-year profit from mining fell by 11 percent, as gold prices continued their decline, a better-than-expected result. The stock is up around 30 percent this year as investors flocked to safe-haven investments

"RRS is one of the few companies to still generate earnings growth, while its investment discipline has left it well placed to withstand the current environment," analysts at Investec said in a note. (Reporting by Kit Rees; Editing by Gareth Jones)