UPDATE 1-Buoyant retailers lead European shares higher

* STOXX 600 up 0.3 pct, euro zone blue chips up 0.2 pct

* FTSE flat as sterling weighs

* Next jumps after Christmas update

* Energy and tech companies also advance (Adds detail and quote, updates prices)

LONDON, Jan 3 (Reuters) - European shares advanced on Wednesday, recovering from a muted start to the year's trading as retail stocks led the way on a day when implementation of the new MiFID financial market rules also attracted attention.

The pan-European STOXX 600 index was up 0.3 percent at 0925 GMT, while euro zone blue chips gained 0.2 percent. Germany's DAX rose 0.4 percent and Britain's FTSE 100 was flat as a stronger pound weighed.

While gains among industrials, healthcare and technology companies supported indexes, trading was expected to be cautious after the holiday season and on the first day the European Union's new market rules came into force.

Though company news was sparse, shares in British retailer Next jumped more than 7 percent to the top of the STOXX after it raised profit guidance on better than expected Christmas sales.

Next is the first major listed retailer to give an update on Christmas trading, but its upbeat update also lifted peer Marks & Spencer by 1.4 percent.

"As much as (Next's) update is good news, the constant update-by-update tinkering of guidance and sharp reactions by the share price just goes to show how shareholders are at the mercy of UK consumer trends and whims," said Mike van Dulken, head of research at Accendo Markets.

"The retail sector is a very tricky one."

Europe's retail index was up 0.7 percent, though it lost 3 percent over 2017.

Shares in furniture retailer Steinhoff were the biggest risers, up 12.8 percent.

Europe's energy sector built on the previous sessions' gains with a 0.7 percent advance, helped by firmer oil prices.

Shares in semiconductor maker AMS were also buoyant, up 2.7 percent after4 strong gains in the previous session for U.S. technology peers.

While falls were limited, outside of the STOXX 600 shares in builder Carillion were down 3.8 percent after Britain's markets watchdog opened an investigation into the company.

(Reporting by Kit Rees; Editing by Alison Williams and David Goodman)