May 4, 2017 / 9:10 AM / 3 months ago

HSBC, Shell drive FTSE gains, Next sinks as UK consumer squeezed

(ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)

* FTSE 100 up 0.4 pct

* Next adds to concerns over consumer squeeze

* HSBC profits, capital ratio beats drive gains

* Oil industry recovery buoys Shell

By Helen Reid

LONDON, May 4 (Reuters) - Britain's FTSE held pace with European shares on Thursday, rising on a tide of robust results with heavyweights HSBC and Royal Dutch Shell driving gains, while retailer Next sank as a difficult consumer environment bit into profits.

The FTSE was up 0.4 percent by 0900 GMT, while Germany's DAX hit a new record high and France's CAC 40 scaled a fresh 9.5-year high.

The biggest lifts to British shares, which are particularly exposed to financials and commodities, were heavyweight bank HSBC and oil major Royal Dutch Shell.

HSBC was the top FTSE gainer, up 3.1 percent after its profits beat expectations and its capital position improved.

The bank's common equity tier 1 ratio, a measure of financial strength, was 14.22 percent, up from 11.9 percent in the same period last year.

"The stronger CET1 print leaves the group in a stronger position to absorb any regulatory headwinds," said KBW analyst Richard Smith.

HSBC led Europe-wide banks, which gained 1 percent.

Royal Dutch Shell shares gained 2.4 percent after the oil major joined rivals Total and BP in reporting better results.

It more than doubled first-quarter profits as higher crude prices gave a helping hand and refining margins improved.

Meanwhile a difficult environment for UK consumers weighed on clothing and homeware retailer Next.

Its shares sank 6.6 percent, set for their worst day since its January profit warning, after it further trimmed its 2017 profit guidance, saying shoppers were cutting back on spending.

"This shows just how tough the high street is," said Andrew Jackson, manager of Miton UK Value Opportunities fund.

"Disposable incomes are being squeezed, and even the mighty Next has no way of countering these headwinds."

The results had a ripple effect on peers Marks & Spencer and Sainsbury, which also fell 3.3 and 1.7 percent.

Next adds to growing concerns over a consumer squeeze, which also hit carpet retailer Carpetright and Costa coffee owner Whitbread in their results last week.

Miner Randgold Resources gained 2.5 percent after reporting a 33 percent rise in first-quarter profit, though it said production fell due to labour strikes at two of its mines.

Mid-cap bookmaker Ladbrokes Coral slipped 3.4 percent after full-year results revealed weaker UK trading. Retail net revenue, the majority of its business, fell 2 percent.

Insurer RSA supported the index, jumping to a 5.5-year high after it reported premiums rose 14 percent in the first quarter. (Editing by Gareth Jones)

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