Britain's FTSE stalls as retail stocks reel

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* FTSE 100 up 0.1 pct, mid-caps down 0.1 pct

* Carpetright (Other OTC: CGHXF - news) collapses 50 pct after profit warning

* Dignity (Other OTC: DGNTY - news) drops 40 pct

By Helen Reid

LONDON, Jan 19 (Reuters) - Britain's major share index stalled on Friday, as profit warnings from Dignity and Carpetright hurt retailers and a drop in retail sales last month provided further evidence of a broad slowdown in consumer spending.

The FTSE 100 inched up 0.1 percent in early deals, caught in a tug-of-war between strong mining stocks and fading energy shares.

It was set for a 1 percent decline on the week, its first week of losses in seven, after a stellar start to the year riding the wave of rising global equities.

Retailers led the decline, as a report showed British shop sales slid by much more than expected in December. That capped the weakest year for retail since 2013 as consumers squeezed by high inflation continued to keep a tight grip on spending .

"This certainly ties in to much of what we have seen this year," said Colin McLean, managing director at SVM Asset Management. "In the past, demand has been quite stable and now it's just a bit more fluid."

Consumers' changing tastes and disruption by online businesses were putting pressure on the high street retailers, McLean said.

Britain's biggest flooring retailer, Carpetright (EUREX: CPRF.EX - news) sank to a record low, slumping 40 percent after warning that profits would miss expectations. Sales in the core flooring category fell 7.1 percent in the post-Christmas period .

Small-cap peer DFS Furniture (Frankfurt: DF0.F - news) fell 5.4 percent with department store Debenhams (Frankfurt: D2T.F - news) also down 3 percent.

Crematorium operator Dignity sank 50 percent after warning on 2018 profit. A price battle forced it to cut funeral prices by about a quarter to preserve market share.

Home improvement retailer Kingfisher (Frankfurt: 812861 - news) fell 2.8 percent to the bottom of the FTSE 100 as traders read across to other retail names. Mid-caps Dixons Carphone (Frankfurt: CWB.F - news) and JD Sports also fell 2.6 to 2.7 percent.

"Lots of the retailers are quite high risk - businesses which used to be quite solid are finding customer activity going down," said SVM's McLean.

"Quite a few, even if they are not showing high debt, have lots of leases and other rigidities in their balance sheet that make it difficult to unscramble," he added.

The UK's general retail index was on track for its worst daily decline in two months, down 2.3 percent.

Among other notable movers, EasyJet (Frankfurt: A1JTC1 - news) rose to the top of the blue-chip index after an upgrade from Morgan Stanley (Xetra: 885836 - news) analysts, citing consolidation in the short-haul airline industry and a strong euro-sterling exchange rate as supportive factors.

(Reporting by Helen Reid, editing by Larry King)