UK's FTSE underperforms as Scottish uncertainty weighs on market

* FTSE falls and underperforms German and French markets

* Uncertainty on Scottish independence vote weighs on FTSE

* Scotland vote due on Sept. 18

* Polls show slight lead for Scots favouring staying in UK

By Sudip Kar-Gupta

LONDON, Sept 17 (Reuters) - Britain's top share index underperformed gains on rival European markets on Wednesday, as the uncertainty raised by Scotland's vote on independence pegged back the UK stock market.

The blue-chip FTSE 100 index edged down by 0.1 percent, or 5.44 points, to 6,786.80 points going into the close of trading.

Engineering conglomerate Smiths Group (Other OTC: SMGKF - news) was the worst-performing FTSE stock in percentage terms, falling 5 percent after it reported a steep fall in annual profits and said it was not planning to sell its medical unit.

The FTSE was the only major European stock market to fall into negative territory, with the UK market underperforming gains of 0.4 percent on Germany's DAX and 0.6 percent on France's CAC.

European equity traders took encouragement from gains on Wall Street, which rose on speculation that the U.S. Federal Reserve will maintain a pledge on low interest rates later in the day.

However, traders saw the Scottish vote - due on Sept. 18 - as preventing the FTSE from latching onto the advances made elsewhere in Europe.

"The market is expecting a 'No' vote against Scottish independence, but no-one really wants to get too involved in the market ahead of the Scottish vote," said Strand Capital managing director Kyri Kangellaris.

Scottish supporters of staying in the United Kingdom were 4 percentage points ahead of those in favour of independence, three different opinion polls showed, although the final result is still seen by some as too close to call.

"Until clarity emerges well after the vote ... it may be prudent for investors to hedge their exposure to UK debt and equities," said Viktor Nossek, head of research at Boost ETP, a provider of exchange traded products (ETPs).

Richard Griffiths, associate director at Berkeley Futures, said: "I think it will be a 'No' vote. If it's a 'No' vote, expect the FTSE to go up by around 50 points, but if it's a 'Yes' vote, expect the FTSE to fall 200 points." (Additional reporting by Francesco Canepa; Editing by Toby Chopra/Ruth Pitchford)