UK FTSE hits record high then slips back; Wolseley falls

* FTSE 100 sets record intraday peak of 7,065.08 points

* Index ends day down 0.3 percent at 7,019.68 points

* Wolseley (LSE: WOS.L - news) falls after H1 earnings

* UK annual CPI (Other OTC: CPICQ - news) inflation hit zero in February

By Sudip Kar-Gupta

LONDON, March 24 (Reuters) - Britain's top share index hit an all-time high before slipping back down on Tuesday, although record low UK inflation data kept investors confident over the market's longer-term prospects.

The blue-chip FTSE 100 index rose as much as 0.4 percent to a record intraday high of 7,065.08 points, but then slipped back to close down 0.3 percent at 7,019.68 points.

Shares (Berlin: DI6.BE - news) in plumbing supplies group Wolseley, which hit an eight-year high on Friday, fell 2.7 percent after it posted a smaller-than-expected increase in first-half earnings.

Some traders expected a short-term pause to the FTSE's winning streak, which has seen the FTSE breach the 7,000 point barrier.

The FTSE is up around 7 percent since the start of 2015, tracking gains in world stock markets which have been lifted by record low interest rates and new economic stimulus measures from the European Central Bank.

"I expect a bit of consolidation," said Manoj Ladwa, head of trading at TJM Partners. "I'd wait for a pullback below 7,000 before going long," he added.

Data on Tuesday showed that British inflation vanished last month, hitting zero for the first time on record, due to low oil and food prices as well as falling prices for consumer goods such as laptops.

The unchanged cost of living will be welcome news for many Britons in the run-up to a national election on May 7, especially as annual wage growth slipped to 1.8 percent at the start of the year.

Rob Hepworth, chief investment officer at Ecclesiastical Investment Management, said the low inflation would boost the UK stock market as it meant British interest rates would stay at record lows for the near term.

"Lower prices for essential, everyday items like food and fuel is a tailwind for the UK economy and also probably pushes interest rate rises even further out into the distance," said Hepworth. (Additional reporting by Francesco Canepa; Editing by Raissa Kasolowsky/Hugh Lawson)