Pearson penalised as UK's FTSE slips off record high

* FTSE closes down 0.5 pct at 7,060.45 points

* Index had earlier hit record high of 7,119.35 points

* Pearson (Xetra: 858266 - news) hit by report of possible LA contract glitch

* Unilever (NYSE: UL - news) rises after solid sales

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

By Sudip Kar-Gupta

LONDON, April 16 (Reuters) - Britain's top share index

slipped off record highs on Thursday, with media group Pearson

underperforming after a newspaper report of a glitch in

a lucrative contract.

The blue-chip FTSE 100 index initially rose to an

all-time high of 7,119.35 points but then edged back and closed

down 0.5 percent at 7,060.45 points.

Pearson fell 4 percent, the worst performer on the FTSE,

after the Los Angeles Times reported that the Los Angeles

Unified School District was seeking a refund from Apple (Shanghai: 603020.SS - news)

over a bungled $1.3 billion effort to supply students with iPads

with curriculum material from Pearson.

Diageo (LSE: DGE.L - news) , the world's largest spirits maker, fell 3.6

percent after reporting lower quarterly sales.

The FTSE has hit a series of record highs this month despite

political uncertainty before Britain's general election on May

7, which has hit sterling.

Opinion polls put the governing Conservatives neck-and-neck

with the opposition Labour party, and the Scottish National

Party may emerge as the third-biggest, raising prospects of a

hung parliament.

The Conservatives have also promised a referendum on

Britain's membership of the European Union by the end of 2017.

Some traders have said the FTSE managed to rise against that

backdrop since the weakness in sterling could help British

exporters, but Beaufort Securities' sales trader Basil Petrides

was more cautious.

"I'm not willing to buy into the market at these levels with

the election just around the corner," he said.

UNILEVER, GOLD MINERS RISE

Consumer goods group Unilever rose 2.6 percent

after better-than-expected sales.

Precious metal miners Randgold and Fresnillo

also advanced as gold extended gains after sluggish

U.S. data weakened the dollar.

InterTrader's chief market strategist Steve Ruffley said the

FTSE could rise to 7,300 points over the coming month.

"The outcome will most likely be a Conservative coalition.

Immediately after the election, we will probably sell off but

any major sell-off will be bought back very quickly."

(Additional reporting by Alasdair Pal and Alistair Smout;

Editing by Robin Pomeroy)