Diageo and BAE fall as UK's FTSE backs off from record high

* FTSE down 0.1 pct after touching record high

* Diageo (LSE: DGE.L - news) drops on quarterly sales fall

* Unilever (NYSE: UL - news) rises to top of the index

* Rise in gold boosts Fresnillo (Other OTC: FNLPF - news) , Randgold

By Alistair Smout

LONDON, April 16 (Reuters) - Britain's top share index touched a record high, then retreated on Thursday, as mixed results at consumer-goods companies led to a pause in the market's rally.

The FTSE 100 index reached a high of 7,119.35 points before edging back. It was down 0.1 percent at 7,090.68 points going into the middle of the trading session.

Diageo, the world's largest spirits maker, fell 2 percent, making it one of the worst performers on the FTSE, after it reported lower quarterly sales.

However, both brewer SABMiller (Xetra: BRW1.DE - news) and consumer goods group Unilever reported good results. SABMiller shares rose 2 percent and Unilever's 4.1 percent.

The FTSE has hit a series of record highs this month despite uncertainty before Britain's general election on May 7, which has held down sterling. The index remains up 8 percent since the start of 2015.

But opinion polls put the Conservatives neck and neck with the opposition Labour party, and the Scottish National Party may emerge as the third-biggest party, making a hung parliament likely. In addition, the Conservatives promise a referendum on Britain's membership of the European Union by the end of 2017, if they win.

"I'm not willing to buy into the market at these levels with the election just around the corner," said Basil Petrides, a sales trader at Beaufort Securities.

UBS DOWNGRADES BAE

Also weighing on the market were Meggitt (Other OTC: MEGGF - news) and BAE Systems, which fell after downgrades from UBS (NYSEArca: FBGX - news) .

BAE also went ex-dividend, contributing to its fall. Hikma and Intu Properties (LSE: INTU.L - news) were among others trading after the period for getting their latest dividend payout had ended, trimming nearly 5 points off the index.

Precious metal miners Fresnillo rose 3 percent and Randgold 2 percent as gold extended gains after sluggish U.S. data weakened the dollar.

A weaker dollar makes gold cheaper for holders of other currencies. It also makes gold more attractive as a hedge. (Additional reporting by Sudip Kar-Gupta; Editing by Crispian Balmer, Larry King)