* FTSE 100 off 0.1 percent as miners, oil stocks retreat
* ARM soars on Windows for tablet reports
* BSkyB up as merger looking more likely
By Tricia Wright
LONDON, Dec 22 (Reuters) - Britain's top share index fell on Wednesday, retreating after hitting a 30-month closing high in the previous session, led down by commodity stocks. ARM Holdings jumped 7.8 percent to a nine-year high on reports Microsoft is working on a new version of its core Windows operating system for devices such as tablets, marking the first time that the software would run on processors designed by the British firm.
By 0908 GMT, the FTSE 100 was off 5.42 points, or 0.1 percent, at 5,946.38, after it ended up 60.19 points, or 1 percent, at 5,951.80 on Tuesday, in extremely thin trade as markets wound down for the Christmas holidays.
Traders were still eyeing 6,000, a level not seen since early June 2008. The index has gained 7.6 percent so far in December, on track for its biggest monthly percentage gain since July 2009.
"I'd say 6,000 is definitely the way (the FTSE 100's) going to go, and I think potentially by the end of the year," Phil Gillett, a trader at Spreadex, said.
Miners, which notched up solid gains on Tuesday as copper hit record highs, followed metals prices lower, with Xstrata and Vedanta Resources the worst sector performers, both off 1.2 percent.
Bucking the trend, midcap peer Hochschild Mining climbed 2.4 percent after Citigroup upgraded its rating on the stock to "hold" from "sell".
Integrated oil stocks also went into reverse, led down by BP , off 0.9 percent.
STRONG ARM
On the upside, ARM Holdings grabbed the top spot on the blue-chip leader board, on the back of the Windows for tablets media reports.
RBS analyst Didier Scemama said such an alliance could be a game changer for ARM: "The big event would be if this is a first step towards full support for ARM in notebooks, desktop and servers," he said.
Both Microsoft and ARM declined to comment on the reports.
BskyB put on 1.7 percent, having earlier touched its highest since March 2004, as the prospects improved of regulatory approval for News International's bid to buy the pay-TV operator.
National Grid, Britain's biggest utility, rose 1.1 percent, with traders citing the cold weather conditions in the UK which are boosting demand for energy.
Investors will keep a close eye on the situation on the Korean peninsula. South Korea announced land and sea military exercises on Wednesday including its largest-ever live-fire drill near North Korea.
British house prices could fall by about 2 percent next year, but the decline could be more than twice that size if government spending cuts derail the recovery, the Royal Institution of Chartered Surveyors said.
Investors will watch the final reading of UK third-quarter GDP data at 0930 GMT for more clues on how fast the economy has been recovering from recession.
Minutes from the December meeting of the Bank of England's Monetary Policy Committee Meeting were also due at 0930 GMT.