* Next hits record highs after strong Xmas sales
* FTSE 100 up 0.4 percent in late session trading
* FTSE to hit 7,000 in Q2 - SVM's McLean
By Sudip Kar-Gupta
LONDON, Jan 3 Strong gains by clothing retailer Next lifted Britain's top equity index on Friday, with many traders expecting the market to push on to record highs this year.
The blue-chip FTSE 100 index was up by 0.4 percent, or 24.44 points, at 6,742.35 in late session trading.
Next's shares hit record highs after the company raised its annual profit outlook following strong Christmas sales. The shares were up 9.6 percent at 60.59 pounds at 1532 GMT, adding the most points to the FTSE 100.
Next's performance helped to lift rival retailer Marks & Spencer, which rose 4.4 percent, and eased fears that the sector may have had weaker-than-expected Christmas sales after Debenhams issued a profit warning this week.
"We're looking a bit better on the retail front. There were a few scares after Debenhams but Next seems to have put things right," said Berkeley Futures associate director Richard Griffiths.
The FTSE 100 rose 14.4 percent in 2013 to mark its best annual gain since 2009.
Many traders and investors expect more progress this year, helped by low interest rates and a gradual UK economic recovery, and see the FTSE breaching 7,000 points, which would mark a record high.
Griffiths said the FTSE could rise 8 percent by June, which would push it up to around 7,280 points, while SVM Asset Management managing director Colin McLean also expected the FTSE to hit 7,000 by the second quarter of this year.
McLean said that, while the stock market rally could be halted by a slowdown in emerging economies, any temporary fall would represent a good buying opportunity.
"Any pullback on the market will be brief and shallow. There's still quite a weight of money coming into the stock market," he said.