Britain's FTSE inches down, Merlin collapses on poor summer trading

* FTSE 100 down 0.1 pct

* Merlin plummets 16 pct

* Pearson (Xetra: 858266 - news) jumps on forecast optimism

* Convatec bounces back (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)

By Julien Ponthus and Helen Reid

LONDON, Oct (Shenzhen: 000069.SZ - news) 17 (Reuters) - British shares edged lower on Tuesday, with a flurry of trading updates driving sharp swings in individual stocks including tourist attractions operator Merlin Entertainments (Frankfurt: A1W713 - news) , which plummeted after disappointing summer sales.

The FTSE ended the day 0.1 percent lower, weighed down by a pullback in mining stocks as metals slipped from three-year peaks hit on Monday.

The index was driven higher earlier, when the pound slipped after Bank of England policymakers speaking in parliament were interpreted by the market as broadly dovish and indicating internal debate over a November rate hike.

Data showing inflation rose to its highest level in more than five years in September made a rate hike more likely, market participants said.

On the day, sharp moves in Merlin and Pearson took centre stage.

Shares (Berlin: DI6.BE - news) in Merlin plunged as much as 21 percent before ending the day down 15.9 percent, its biggest fall ever, after the Madame Tussauds and Legoland operator blamed a series of attacks in Britain and unfavourable weather for a dip in trading in its key summer period.

"Given all this additional uncertainty we see less and less reasons to own the shares," Liberum analysts said.

"While the market may be quiet, it is currently extremely intolerant of any company that dares to miss forecasts", Chris Beauchamp, an IG (Frankfurt: A0EARV - news) market analyst, wrote.

Convatec however, which had plummeted 26 percent after a profit warning on Monday, bounced back 3.9 percent, despite several broker downgrades on the medical devices maker.

Education group Pearson was the top performer, up 7.3 percent after it said it expected full-year operating profit to come in at the top half of its forecast range.

Mediclinic retreated 4.1 percent after the South African private hospital group said it expects half-year earnings to drop due to weak performance in the United Arab Emirates.

A downgrade to "market perform" from Bernstein analysts sent recently merged asset manager Standard Life Aberdeen down 3.9 percent.

"The stock feels like a consensus long post-deal and we see limited scope for remaining catalysts to drive the shares materially higher over the next twelve months," analysts said in a note.

Challenger bank Virgin Money shone at the top of the mid-cap index after reporting steady gross mortgage lending in the third quarter thanks to robust customer demand due to low unemployment and a resilient housing market.

Investec (LSE: INVP.L - news) analyst Ian Gordon said he expected the "stunning performance" to lead to new consensus upgrades on the stock.

Shares in online fashion retailer ASOS (LSE: ASC.L - news) rose 1.8 percent after it raised its sales growth forecast, saying new products, competitive prices and better customer services continued to attract millennials to its website. (Reporting by Julien Ponthus; Editing by Andrew Heavens)