Britain's FTSE falls as retail and property stocks slump

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* FTSE 100 down 0.5 pct, mid-cap down 1.1 pct

* Retailers and housebuilders among top decliners

* Gold (Other OTC: GDCWF - news) miners and utilities stocks up sharply

By Atul Prakash

LONDON, July 6 (Reuters) - Britain's blue-chip share index fell on Wednesday, with a sharp sell-off in retail and property-related stocks outpacing a rally in precious metals miners after prices of safe-haven gold hit a two-year peak.

The FTSE 100 fell 0.5 percent by 0846 GMT. The internationally-exposed FTSE 100 has partially recovered following a post-Brexit slump and is up about 4 percent since June 23 - the date of the EU referendum.

However, it is down about 10 percent in dollar terms as the slump in the sterling to a 31-year low has reduced the dollar value of the market.

In contrast, Britain's domestically-focused, mid-cap FTSE 250 share index fell 1.1 percent, underperforming the blue-chip index, with property and banking stocks falling heavily on concerns about the country's economic outlook after the vote to leave the European Union.

The mid-cap index has fallen more than 10 percent since June 23 in sterling terms.

"The FTSE 100 is doing its best to keep the post-Brexit recovery alive in spite of the understandable uncertainty that has arisen following the referendum," said Mike van Dulken, head of research at Accendo Markets. "Defensives and safe havens have certainly lived up to their name."

Gold miner Randgold Resources rose 4 percent to a new record high, while Fresnillo (Other OTC: FNLPF - news) gained 4.3 percent to the highest level since late 2012.

Utilities stocks, generally seen as defensive plays, were also in demand, with United Utilities (LSE: UU.L - news) , Severn Trent (Other OTC: STRNY - news) , SSE (LSE: SSE.L - news) and National Grid (LSE: NG.L - news) gaining 1.5 to 2.4 percent.

However, UK retailers slipped following a negative sector note from HSBC, with shares in Tesco (Xetra: 852647 - news) and Morrisons falling 5 percent and 3.7 percent respectively.

"We expect that Tesco has lost a lot of its buying power and position over recent years due to mismanagement," HSBC analysts said. "We downgrade (it) to 'hold' from 'buy' as short-term sentiment would be against the sector."

Property-related companies came under further selling pressure as shares in Barratt Development, Taylor Wimpey and British Land (LSE: BLND.L - news) fell 2.4 to 3.5 percent on lingering concerns about the sector's growth outlook.

Shares (Berlin: DI6.BE - news) in mid-cap companies Redrow (LSE: RDW.L - news) , Bovis Homes (LSE: BVS.L - news) and Zoopla Property (LSE: ZPLA.L - news) fell 3.5 to 4.1 percent. Domestic banks Metro Bank and Shawbrook were down 7 percent and 3.6 percent respectively due to concerns over Brexit.

(Reporting by Atul Prakash; Editing by Jon Boyle)