Britain's FTSE surges on neat Next numbers

* FTSE 100 closes up 1.4 percent at 5,712.82 points

* Next, Shire top leaderboard after strong figures

* Mid-cap stock Cape slumps 35.5 pct after profit-warning

* Uncertainty over Fed, ECB meetings keeps volumes low

By Sudip Kar-Gupta

LONDON, Aug 1 (Reuters) - Britain's benchmark share index rose on Wednesday following strong numbers from retailer Next and other blue-chip companies, although many investors held off trading ahead of key U.S. and European central bank policy meetings.

The blue-chip FTSE 100 ended up 77.54 points, or 1.4 percent higher, at 5,712.82 points - its highest closing level in nearly two weeks since ending at 5,714.19 points on July 19.

A raft of strong numbers from leading British companies buoyed sentiment ahead of the meetings of the U.S. Federal Reserve and European Central Bank on Wednesday and Thursday, which could give more clues over future monetary stimulus moves.

Clothing retailer Next topped the FTSE 100 leaderboard, surging 6.5 percent after the company raised its own profit guidance and beat targets for its first-half sales growth.

Pharmaceutical company Shire rose 4.8 percent after posting higher second quarter earnings, while Asia-focused bank Standard Chartered gained 3.6 percent after reporting higher profits.

However, several traders said equity markets could quickly fall back on Thursday if the Fed and ECB failed to announce concrete new measures to fight the slowing global economy and euro zone debt crisis at their meetings.

"Earnings have been pretty good on the whole. We bought some Shire and Standard Chartered," said JN Financial senior trader Adrian Redmond.

"But the central banks will have to come up with something very, very substantial for us to hold these levels. I wouldn't be a buyer of the FTSE at these levels ahead of the Fed and ECB," he added.

MID-CAP CAPE CRASHES LOWER

A retreat in the price of gold pushed down mining stocks, with Randgold Resources falling 2.1 percent to make it the FTSE 100's worst performer.

Industrial services provider Cape was the worst-performing stock on the FTSE 250 mid-cap index, slumping 35.5 percent after issuing a profit warning.

However, uncertainty over the Fed and ECB meetings kept trading volumes below average. Volumes on the FTSE 100 were at 64 percent of their average 90-day volumes.

Analysts expect the Fed may wait until September before unveiling more bond purchases to help the economy.

Expectations that the ECB may announce steps to lower the borrowing costs of Spain and Italy have also been tempered by Germany's opposition to giving the euro zone's future ESM rescue fund a full banking licence that would let it borrow from the ECB to fund government bond purchases.

Mike Turner, European equity options broker at XBZ Ltd, said institutional investor clients had been buying "straddle" options which pay out in case of a rise in market volatility, regardless of whether the market moves higher or lower.

"People have been buying 'straddles', looking for an up-tick in volatility," he said.

Many were opting against trading and holding onto their cash reserves, however, preparing to re-enter the markets on Friday once the Fed and ECB meetings were out of the way.

"We are in cash. There's no point in being a hero by assuming that something significant will come out of these meetings," said EGR Broking managing director Steven Mayne. (Reporting by Sudip Kar-Gupta; Editing by Catherine Evans)