UK's FTSE falters as Rolls-Royce and mining stocks fall

* Rolls-Royce falls further on broker downgrades

* Miners under pressure as metals prices fall

* ARM boosted by Morgan Stanley (Xetra: 885836 - news) upgrade

By Atul Prakash

LONDON, July 7 (Reuters) - Britain's top equity index edged lower on Tuesday, with Rolls-Royce falling for a second straight session after an earlier profit downgrade while weak metals prices weighed on mining shares.

The FTSE 100 index was down 0.1 percent at 6,531.96 points, having fallen 0.8 percent in the previous session after Greek voters rejected austerity conditions imposed on it as part of a bailout programme.

Rolls-Royce fell 3.6 percent, extending a 6.3 percent drop on Monday after the company cut profit forecasts, as investment banks Natixis (Paris: FR0000120685 - news) , Investec (LSE: INVP.L - news) , Bernstein and RBC (Other OTC: RBCI - news) all reduced price targets on the stock.

Rolls-Royce was the worst-performing FTSE 100 stock in percentage terms; chipmaker ARM was the best. ARM rose 2.8 percent after Morgan Stanley raised its stance on the stock to "overweight" from "equal weight" and added the company to its "best ideas list".

Mining stocks declined after copper prices fell to a five-month low, amid concern about economic growth in China, the world's top metals consumer.

"While Greece remains in focus, the volatility in Chinese stock markets has continued, impacting on commodity prices and related sectors such as the miners," said Keith Bowman, equity analyst at Hargreaves Lansdown (LSE: HL.L - news) .

An emergency euro zone summit on Tuesday will hear new proposals from Greek Prime Minister Alexis Tsipras on a further bailout. Without more aid, Greece may become the first state to leave the euro since the single currency was introduced in 1999.

The FTSE 100 is down by nearly 1 percent since the start of 2015, and some 8 percent below a record high of 7,122.74 points reached in April. (Additional reporting by Sudip Kar-Gupta, editing by Larry King)