If she's a friend first then emphasize how much you enjoy being friends with her like the other person mentioned. If she's not your friend and just some girl you know then mention how you would like to be friends. Unfortunately if she's in like with you then it will hurt her either way. It's obvious that you mean well and don't want to hurt her which I find refreshing. So thanks for asking a question like that. Just try to be nice when you talk to her an make sure it's not in front of everyone
You could tell her that you respect her, but you're just not attracted to her. Absolutely do NOT make the mistake of telling her that you don't want to be in a relationship and then turn around and date another girl, though. That would probably hurt her more than anything.