* FTSE 100 down 0.5 percent
* Commodity stocks, retailers weak
* ARM Holdings up as M&A speculation supports
By Simon Falush
LONDON, Jan 5 (Reuters) - Falling commodity prices and worries on the high street dragged commodity and retail stocks lower, pushing Britain's top shares into negative territory on Wednesday.
The FTSE 100 index was 28.13 points, or 0.5 percent, lower at 5,985.74 by 0905 GMT on Wednesday after rising 1.9 percent to close at 6,013.87 on Tuesday, its highest finish since June 2008.
Miners were hit as metal and energy prices sagged on a weaker dollar. African Barrick Gold fell 1.2 percent while Rio Tinto lost 0.4 percent.
Energy stocks were also under pressure as oil prices dropped for a second day. Crude fell below $89 after falling 2.4 percent on Tuesday, as investor enthusiasm for commodities fell, following a brisk year-end rally in raw material prices.
Royal Dutch Sell lost 1.1 percent while BG Group eased 0.2 percent.
However, while the market was lower on Wednesday, analysts saw the broad upward trend as being intact.
"Given the strength of yesterday's bounce, some form of correction was always likely, but on the whole investors remain upbeat on equities for 2011, certainly for the first half of the year," said Peter Dixon, economist at Commerzbank.
RETAIL PRESSURE
Retailers were under pressure after two of Britain's biggest players reported a drop in sales in the run-up to Christmas.
Next said sales at shops open at least a year fell 6.1 percent from Aug.1 to Dec. 24. Its shares rose 0.8 percent as the fall was broadly in line with expectations.
Music and games retailer HMV slumped 24 percent after it said full-year profit would be at the lower end of expectations.
The soggy figures dented high-street stalwart Marks & Spencer which slid 3.6 percent, while home improvements retailer Kingfisher lost 1.7 percent.
Companies which supply retailers, such as consumer goods producers Reckitt Benckiser and Unilever, also lost ground with Associated British Foods down 2.1 percent after Investec cut it to "hold" from "buy" on valuation grounds.
Technology company Arm Holdings was the top of a skimpy list of blue-chip risers, boosted by a high profile trade fair in the United States and bid talk in the sector.
Mid-cap peer CSR jumped 6.8 percent, with Seymour Pierce saying M&A could lead the market to refocus on the discount that CSR trades at to some of its peers.
With the market retreating from a 31-month high, technical analysts were watching resistance levels to see what the likely short-term scale of any fall will be.
"The key area to watch is 5,902.11. It is often said that old tops become new bottoms so a break through this level will not only mean the last major swing bottom at 5,911.02 has been violated but also that almost the entire December to January rally has been wiped out," Enis Mehmet, analyst at Autochartist said.
On the economic front, December's Markit/CIPS UK construction PMI report will be released at 0930 GMT, with a reading of 50.9 expected, down from 51.8 in November.
Across the Atlantic, the ADP National employment survey and the Challenger Layoffs numbers for December, set for release at 1230 GMT and 1315 GMT respectively, will provide pointers toward's Friday's key U.S. December jobs report. The December U.S. ISM non-manufacturing index will also be released on Wednesday, at 1500 GMT. (Editing by Dan Lalor)