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* STOXX Europe 600 closes 0.1 percent lower
* Next shares sink after profit warning
* Credit Suisse leads banks higher
By Atul Prakash and Alistair Smout
LONDON, Jan 4 (Reuters) - European shares edged down from aone-year high on Wednesday, with retailers in focus afterstandout faller Next cut its profit guidance andcautioned on future trade.
The pan-European STOXX 600 closed 0.1 percentlower, pulling back from its highest level since December 2015,reached in the previous session.
The index was dragged down by a 14.4 percent slump in sharesof UK fashion retailer Next, making it the biggest percentagefaller on the STOXX 600. The stock has lost nearly 40 percentover the past year.
Next's warning put pressure on other high street retailerswith UK exposure. Marks & Spencer slumped 6.1 percentand Primark-owner Associated British Foods fell 3.7percent. The STOXX 600 retail index was down 1 percent,the biggest sectoral faller.
"We are already seeing signs of inflation picking up asimport prices rise in the wake of sterling's fall," said StephenMacklow-Smith, head of European equity strategy at JPMorganAsset Management.
"Retailers are likely to respond with price competition,which is likely to put pressure on their margins ... The onlyquestion is how much of this is already in the price, given thatretailers have underperformed since late 2015. My sense is thatfurther pressure on real incomes is not yet fully discounted."
The exception was B&M. The value retailer was thetop STOXX 600 riser, up 9.5 percent after reporting recordChristmas trading.
The STOXX 600 is up nearly 12 percent in the seven weekssince lows hit following the U.S. presidential election, asinvestors bet that global growth and inflation will rise underPresident-elect Donald Trump.
Euro zone services PMIs provided further evidence ofeconomic strength, as businesses ended 2016 by ramping upactivity at the fastest pace for five-and-a-half years.
In financials, Credit Suisse rose 3.5 percentfollowing a positive sector note by Barclays. European banks rose 0.6 percent, the top sectoral riser.
"The calendar of political events remains full, and economicvariables open to a wide range of outcomes, whose ebbs and flowsshould stimulate trading further in 2017, giving upside toinvestment bank revenues," Barclays analysts said in a note.
UK-listed housebuilders were also among top sectoralgainers, after Deutsche Bank said there was close to 30 percentupside in the sector.
Shares in Barratt Developments, Taylor Wimpey and Persimmon rose between 2.8 percent and 4.1percent, also helped by UK mortgage approvals in Novemberreaching an eight-month high, indicating a post-Brexit recovery.
French pharma firm Ipsen hit a record high afterNatixis upgraded the stock to "buy" from "hold". It closed 3percent higher. (Editing by Dominic Evans)
