* FTSEurofirst 300 down 0.1 pct
* Holds around 20 points below 5-1/2 year peak
* Next hits record high on higher sales, special dividend
By Toni Vorobyova
LONDON, Jan 3 European stocks steadied below
their recent 5-1/2 year peaks on Friday, as a rally in retailers
fueled by an encouraging update from Next was offset by
a decline in mining shares following weak Chinese data.
Retailers gained 0.7 percent after Britain's Next
reported strong Christmas sales, raised its profit forecast and
announced a special dividend. Next shares jumped
10.3 percent, hitting an intra-day record high of 6,130 pence
and on track for their biggest one-day jump in five years.
The update reassured investors about the health of the
broader sector following a profit warning from rival Debenhams
. Peer Marks & Spencer added 1.6 percent.
"Most of the phone calls have been about Next, people
cutting shorts and going long," said Jordan Hiscott, a senior
trader at Gekko Global Markets. Some of those short positions
had been opened following the Debenhams warning, he said.
Broader sentiment however, remained cautious. Investors took
profits from a forecast-beating 2013 rally and adjusted their
positions ahead of the first full week of the new year.
The FTSEurofirst 300 was down 0.1 percent at 1,304.64 points
by 0836 GMT, extending Thursday's 0.8 percent drop after failing
to hold a 5-1/2 year intra-day peak of 1,320.50.
The weakness is unusual. The start of the year tends to see
investors putting fresh money into equities. Indeed, the
FTSEurofirst 300 has only fallen on the first two trading days
of the year once in the past decade - in 2008.
This time, the caution comes after a stellar 2013, when the
FTSEurofirst 300 added 16 percent and the EuroSTOXX 50 index of
euro zone blue chips rose 18 percent to 3,109.00 - more than 200
points higher than analysts had forecast before the start of
"What we have seen from slightly more longer-term accounts
is that they have had a cracking return from 2013 and they have
taken some risk off the books," said Hiscott at Gekko. "They are
looking to see which way the market moves in the first few weeks
of January before taking new long positions."
Miners were among the worst hit sectors for a second day,
after more weak data from China, the world's top metals
consumer, which showed growth in the Chinese service sector fell
to a four-month low in December. The STOXX Europe 600 Basic
Resources index fell 0.7 percent.
Volumes remained relatively subdued, with many market
participants on holiday until next week.
"Data calendar is relatively light today and we will not be
surprised to see a bit more consolidations given the strong
performance around the end of last year," analysts at Credit
Agricole CIB said in a note.