Raise a bit on the flop.
Besides that, I think the fold was OK here considering you don't have much reads on him. He limped from UTG, he could have easily had a high A or high suited diamonds, even diamond suited connecting cards. Without betting out the flop there, the way this is played, I don't mind the fold on the river there.
He could have just as easily been bluffing
trying to represent the flush, and then just reraising overbetting the river, trying to push you off you hand there--but there's nothing wrong with the fold there at the river, if we go by how you played on the flop and turn. Could have played it a bit better on the flop and turn though.