Burberry update and housebuilders knock Britain's FTSE off 2016 high

* FTSE 100 down 0.2 pct

* Burberry drops after sales fall

* Persimmon (Other OTC: PSMMF - news) leads housebuilders lower

* Miners retreat from one-month high

* Entertainment One (Other OTC: ENTMF - news) surges on report of ITV (LSE: ITV.L - news) interest (Adds detail and updates prices)

By Kit Rees and Alistair Smout

LONDON, April 14 (Reuters) - Britain's top share index edged down on Thursday from its highest close this year, driven by a tumble in fashion firm Burberry after it reported falling sales and warned of tough trading conditions.

Burberry slid 5.1 percent after it said a drop in tourist spending in continental Europe and weak demand in Hong Kong had depressed sales.

The group was also not optimistic for the current year, saying profit would come in towards the bottom of forecasts.

"Burberry has suffered of late due to its dependency on Hong Kong and China ... and it looks like the company's issues have no end in sight," Connor Campbell, financial analyst at Spreadex, said in a note. Burberry is suffering from weakness in both retail and wholesale divisions, he added.

However, housebuilder Persimmon was the top faller on the FTSE 100, dropping 6.1 percent after reporting its latest results. Analysts at UBS (LSE: 0QNR.L - news) cited concerns that Britain's referendum in June on the country's EU membership could be an overhang for the sector.

"This is a solid but largely unexciting update that does not change our stance on the stock or the sector. The risks are rising for the house builders ... and we remain concerned about the longer-term sustainability of the very favourable market conditions," Robin Hardy, analyst at Shore Capital Markets, said in a note.

Fellow housebuilders Berkeley Group, Barratt Developments and Taylor Wimpey (LSE: TW.L - news) were also down by 2.8 to 4.2 percent.

The FTSE 100 index was 0.2 percent lower at 6,350.03 points by 1356 GMT, having posted its highest close of 2016 on Wednesday.

Much of the index's recent strength has been due to gains in the mining sector, which pulled back on Thursday to be the biggest sectoral faller.

Miners dropped 0.9 percent, sliding off a one-month high, as copper prices also eased off a recent peak.

Among outperformers, chemical company Johnson Matthey (LSE: JMAT.L - news) rose 2.4 percent, the top FTSE 100 riser, after Credit Suisse lifted its rating on the stock to "outperform".

In the mid-caps, Debenhams (Other OTC: DBHSF - news) , Britain's second-largest department store group, rose 3.2 percent after it said it was close to naming a new boss and beat forecasts with an 5.5 percent rise in first-half profit. That put Debenhams on track to meet full-year expectations.

"Interim results came in better than our forecast," analysts at Cantor Fitzgerald said in a note. It (Other OTC: ITGL - news) said the stock was not expensive but that longer-term concerns remained, warranting a continued "hold" rating on the stock.

"We remain concerned that the department stores are capital intensive and need to be furbished to a higher standard to attract shoppers," Cantor Fitzgerald added.

Entertainment One surged 13.6 percent after a report that ITV was in talks to buy the Canadian broadcaster. Entertainment One said it had not received an approach, and ITV was broadly unchanged.

Hays (LSE: HAS.L - news) rose 7.1 percent after the firm reported solid results, even as it said it expected cautious client sentiment ahead of Britain's EU referendum.

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

If you have any thoughts, suggestions or feedback on this, please email mike.dolan@thomsonreuters.com.

Mike Dolan, Markets Editor EMEA. (Reporting by Alistair Smout; Editing by Mark Heinrich and Susan Fenton)