* UK consumer confidence shows surprise rise in Dec
* Administrators close MFI stores, around 1,200 jobs go
* Discount chain Poundland to create 1,200 jobs
* B&Q announces "best ever" sale to start on Christmas Eve
* Retailers Lookers, HR Owen, Laura Ashley say trade tough
(Adds MFI confirmation)
By Mark Potter and James Davey
LONDON, Dec 19 (Reuters) - Unprecedented pre-Christmas discounting by Britain's store groups is lifting consumer confidence from its lows, a survey showed on Friday, but most retailers are struggling and remain gloomy about 2009.
Administrators to stricken furniture chain MFI said they had been unable to find a buyer and had closed its 111 stores, with the loss of around 1,200 jobs.
Car dealers Lookers and H.R. Owen and fashion-to-homewares group Laura Ashley said trading was tough, while DIY chain B&Q said it would start its "best ever" sale on Christmas Eve, with up to 75 percent off thousands of products and half price off all kitchen units and bathrooms.
However, discount chain Poundland showed some store groups are thriving in the economic downturn by announcing plans to open at least 35 stores next year, creating 1,200 jobs.
Most of Britain's retailers are struggling as debt-laden shoppers cut back spending amid rising unemployment, sliding house prices and fears of a deep recession.
Pollsters GfK NOP reported a surprise 2-point rise in their monthly consumer confidence index for December to -33.
That was the highest level since September and beat analysts' consensus forecast that it would fall and match the series low of -39 hit in July.
However, analysts said confidence remained at historically low levels and the improvement was probably driven by deep discounting by retailers, and so was unlikely to last.
"I strongly suspect that once the sales end or lessen that spending will slow quite markedly," said Global Insight economist Howard Archer.
"The pressures on consumers are pretty intense and are deepening, particularly with unemployment surging. So it's really hard to see consumer spending doing anything else but contracting quite significantly next year."
A slowdown in spending since the financial market crisis in September has driven store groups to launch an unprecedented wave of discounting in the key pre-Christmas trading period.
Some have not survived. On Wednesday, administrators to British toys-to-DVDs chain Woolworths said it would close by Jan. 5, with the loss of 27,000 jobs, unless a last-minute buyer was found.
On Friday, administrators to furniture chain MFI said they had been unable to find a buyer and had closed its shops.
"Following the unresolved negotiations with parties who had wished to acquire the rights to the fulfilment of the company's order book, the administrators have decided to cease trading and to effect a refund of customer monies," administrators MCR said in a statement. "All stores have now been closed."
WORST STILL TO COME?
Debit and credit card group Visa Europe said on Friday its analysis of Christmas spending suggested a strong month in November, but a weakening from the second week of December.
"Either consumers are delaying many of their purchases in the hope of finding last minute bargains, or they have decided to rein in their spending completely," said Commercial Director Steve Perry.
Trading updates from retailers suggested any improvement in consumer confidence had yet to translate into sales.
"What people say and what they do are different things," said Pali International analyst Nick Bubb.
Car dealer Lookers warned on profits and scrapped its final dividend, sending its shares sliding as much as 14.6 percent to 19 pence.
Rival H.R. Owen said it had seen no noticeable impact so far from the cut in VAT and that it expected to make an operating loss for the second-half of its financial year. Its shares fell as much as 22 percent to 58 pence.
Fashion and homewares group Laura Ashley was also downbeat, saying that sales at stores open at least a year fell 9.9 percent in the 20 weeks to Dec. 13. (Additional reporting by Christina Fincher; Editing by Simon Jessop)