Britain's FTSE edges higher on positive company results

* FTSE 100 up 0.2 pct

* ARM Holdings (LSE: ARM.L - news) surges on confident outlook

* Sky (LSE: BSY.L - news) , Reckitt rally after results

* Merlin to Launch Legoland in China

* Pearson (Xetra: 858266 - news) set for record one-day loss (Updates prices, adds detail)

By Kit Rees and Alistair Smout

LONDON, Oct (HKSE: 3366-OL.HK - news) 21 (Reuters) - Britain's top share index edged into positive territory on Wednesday, led higher by a set of positive company results from ARM Holdings, Merlin Entertainments and Sky.

Chip designer ARM, the products of which are used in Apple (Swiss: AAPL.SW - news) products, surged 5.7 percent and was on course for its biggest daily rise in two years.

The jump came after a 27 percent rise in third-quarter profit and its confident outlook alleviated concerns about a slowdown in the semi-conductor sector.

"ARM is the most disruptive company on the planet. One that is a fraction of the market cap of the companies it is disrupting," Neil Campling, senior analyst at brokerage Aviate Global, wrote in a note, adding that the results indicated that the company is gaining further market share.

European pay-TV group Sky rose 2.7 percent after posting slightly better than expected first-quarter operating profit, helped by strong new broadband additions in Britain.

Britain's Merlin Entertainments (LSE: MERL.L - news) rose 4.5 percent after announcing that it will take its Legoland amusement park to Shanghai as part of a deal agreed with investment firm China Media Capital during the state visit of President Xi Jinping.

Reckitt Benckiser (Xetra: A0M1W6 - news) rose 2.2 percent, touching a record high after it raised its full-year sales outlook following a bigger than expected gain in third-quarter sales, helped by consumer health products.

The FTSE 100 index was broadly in line with its European peers, up 0.2 percent at 6,358.75 points by 1353 GMT.

Among fallers, Pearson plummeted 15.8 percent, set for its biggest one-day loss, after the British education publisher said that lower enrolments at some colleges in the United States and lower school text book purchases in some parts of South Africa would hit full-year results.

"With enrolment down, it hits their bottom line and I think that's what the market is punishing the stock for ... you're looking at a lower income stream for the next couple of years for Pearson," Richard Styger, a trader at Timber Hill, said.

Among the mid-caps, Home Retail (Other OTC: HMRLF - news) slumped 17 percent after Britain's biggest household goods retailer issued a profit warning because of weak Argos trading.

"Despite being sellers this has somewhat exceeded even our bearish anticipation," analysts at Haitong Research said in a note, reiterating their "sell" rating on the stock.

"The unwinding of the Argos story leaves us needing to be persuaded that it is not staring into an abyss." (Editing by David Goodman)