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* Retail in focus, British supermarkets lead
* Basic resources extend gains
* Financials suffer as Italian banks weigh
By Helen Reid
LONDON, Jan 10 (Reuters) - Britain's FTSE 100 share index climbed to fresh record highs on Tuesday with UK retailers gaining, while European blue chips failed to hold early gains, with financials the biggest drag.
The pan-European STOXX 600 index was down 0.3 percent, while the FTSE 100 hit a new all-time high of 7,261.16 points before paring back slightly to stand 0.2 percent higher.
France's CAC 40 and Germany's DAX were both down 0.1 percent.
Retail was heavily in focus. Morrisons was a top gainer in London after Christmas trading results exceeded expectations. Its shares were up 4.5 percent and had already traded a full day's average volume within the first 15 minutes.
Britain's largest retailer, Tesco, joined Morrisons at the top of the table, up 3.5 percent after market research showed it had the fastest sales growth of the country's four major players.
Meanwhile German discount retailer Metro lost 2 percent after reporting sluggish festive sales.
Basic resources stocks were the top performers, extending their recent gains. The top risers were Anglo American , Rio Tinto and BHP Billiton, which tracked the price of copper higher.
The fast food delivery company Just Eat was the top faller on the FTSE, down 6.3 percent, after reporting full-year order growth of 42 percent but failing to beat its estimates.
"With a stock trading on such a lofty valuation, the market has grown to expect the company to exceed its estimates, so there's a little bit of disappointment," said Michael Stewart, analyst at Panmure Gordon Equities.
"It highlights the expectation that these companies can go on upgrading forever. We believe the investment case is intact, especially if the acquisition of Hungry House goes ahead."
Insurance and banking were the worst performing sectors across indexes, with Commerzbank the biggest DAX faller, down 2.5 percent on a UBS downgrade to "sell", and Deutsche Bank tracking it lower, down 2.3 percent.
Spain's Banco Popular led the Madrid IBEX lower, falling 3.1 percent.
Italian banks were back in focus for non-performing loans after Popolare di Vicenza and Veneto Banca proposed a settlement with shareholders that could cost more than 600 million euros.
Banco BPM, which had a winning streak in its first trading week, was down 2.2 percent at the bottom of Italy's FTSE MIB index, with Unicredit, Ubi Banca and Intesa Sanpaolo not far behind. (Editing by Kevin Liffey)