UPDATE 2-Next has solid Christmas without cutting prices

* Sales in 58 days to Dec. 25 up 2.9 pct

* Sees full-year pretax profit up 11.5 pct

* Shares rise some 4 pct, topping FTSE 100 index (Adds CEO comments, analyst reaction)

By Paul Sandle

LONDON, Dec 30 (Reuters) - Next signalled brighterprospects for British retailers on Tuesday with a solid rise inChristmas sales, especially online, without resorting to thediscounting seen on many shopping streets.

The British fashion company has outperformed rivals for adecade thanks to its strong online business, new stores anddiversification overseas and into areas such as homewares.

The group's skills in multichannel shopping across stores,catalogue and online, helped to produce a 2.9 percent increasein sales from Oct. 28 to Dec. 24, at the upper end of itsexpectations.

Next, the first big British retailer to report on theholiday season, benefited from its policy of not cutting pricesbefore Christmas. And it did not take part in "Black Friday"promotions in late November that sent Britain's retail salesgrowth to a 27-year high.

Before Black Friday, retailers had been having a tough timedue partly due to a mild autumn that hit sales of winterfashions. Muted wage growth in Britain has also forced consumersto keep spending under control.

Chief Executive Simon Wolfson said Christmas had been alittle bit better than he had expected back in the autumn, whenwarm weather was hurting sales of winter clothes. This forcedNext to cut its profit guidance and fourth-quarter salesexpectations.

"We had discounted all the bad news in October," he said.

Full-price sales at Next dipped slightly in the week ofBlack Friday, a phenomenon imported from the United States, butrose week-on-week in the run up to Christmas.

Wolfson said Next also had a successful post-Christmasclearance, with more stock on offer than a year earlier.

The group said it now expected profit for the year to Jan.24 to rise 11.5 percent to be within 10 million pounds ($15.5million) either side of 775 million pounds, 5 million poundsahead of the midpoint guidance it issued in October.

Next's shares, which have risen 22 percent in the last 12months, were up 3.9 percent at 6,772 pence at 1246 GMT. Itsrival Marks & Spencer was up 0.2 percent.

Neil Saunders, managing director of retail consultancyConlumino, said Next outperformed for a number of reasons.

"Its range is well priced and well positioned and so iteasily captures a large share of shoppers. It is also a leaderin multichannel, which makes it convenient and easy place toshop," he said. "Its policy of not discounting outside of salesperiods is highly beneficial for margins and profits."

Next's Directory Internet and catalogue business was thestandout performer in the run up to Christmas with a 7.5 percentrise in sales. Sales in its stores rose 0.5 percent, it said.

"More people were doing their Christmas shopping online thanlast year, and that trend seems to be continuing," Wolfson said.

But stores remained central to its growth strategy, he said,with about half of online orders picked up in shops.

Researchers Mintel had predicted European online retailsales would rise 17 percent to 193 billion euros this year, upfrom 15 percent in 2013.

But there is also evidence that a greater proportion of thisgrowth is from shops offering customers the option of picking uponline orders in store.

Wolfson said the outlook for the British consumer lookedrelatively benign, and he said an end to the decline in realwages boded well for the retailer. But he remained cautiousabout the group's sales budget for the year ahead.

Wolfson said Next would open about 350,000 square feet ofnew space in the coming year, and some could come from landowned by grocers. "There are some sites that supermarkets havewhere we would be interested in taking additional space."

Next said it would pay a further special dividend of 50pence a share.

($1 = 0.6437 pounds) (Editing by Susan Thomas and Jane Merriman)