Burberry sales lifted by return to growth in China

* Q3 sales up by 1 percent, like-for-like unchanged

* Mainland China returns to growth, but HK still a challenge

* FD says luxury sector outlook still uncertain (Adds FD comments, details, shares)

By Li-mei Hoang

LONDON, Jan 14 (Reuters) - A return to growth in mainland China enabled British fashion house Burberry to post a small rise in sales in the third quarter, after missing forecasts in the first half.

The 160-year-old company, known for its trenchcoats and cashmere scarves, on Thursday reported growth from mainland China, Korea and Japan, but said sales were weighed down by Hong Kong and Macau, which are attracting fewer Chinese tourists.

Economic uncertainty in China means Burberry has suffered in the past year from a drop in demand for luxury goods from Chinese shoppers, who account for 30 to 40 percent of its global revenue.

Burberry shares rose following the results, which were in line with expectations and eased concerns of a fall in Chinese demand, which has hit peers Gucci and LVMH.

"We are very mindful of what is happening in the luxury sector globally ...in Hong Kong and Macau it did remain challenging," Chief Financial Officer Carol Fairweather said.

Burberry reported a sharp sales slowdown in Hong Kong and China in October, leading the FTSE 100 company to miss growth forecasts and warn of an increasingly challenging environment for luxury goods.

The results were being closely watched to see what progress chief executive Christopher Bailey has made in tackling the challenge of navigating difficult trading in Burberry's main markets whilst trying to meet shareholder expectations of sales growth in its second half.

Fairweather said the outlook for the luxury sector remained uncertain and in response Burberry was looking to grow in different regions, channels and products.

"As the consumer environment for luxury continues to evolve ... we are anticipating and responding by looking for new growth opportunities," she said, adding an update with full details would be provided at its May interim results.

Analysts expect Burberry will try to maintain its full year profit guidance of 428 million pounds ($614.91 million), through cost cutting measures such as renegotiating rents, curbing staff bonuses and hiring freezes.

"This can only be seen as a short term measure as a longer term freeze on recruitment and incentive payments will chip away at the stability of the business," Liberum analyst Tom Gadsby said.

Burberry's retail revenue for the three months ended Dec. 31, grew by 1 percent to 603 million pounds ($869.53 million) helped by strong demand in Germany, Spain and Italy.

Like-for-like sales were unchanged year on year, an improvement from a 4 percent fall in the second quarter.

Burberry said it had seen a slowdown in the UK, which had been hit by warm weather, the strength of sterling and a drop in Chinese and Middle Eastern customers. The Americas returned to marginally positive growth.

($1 = 0.6960 pounds) (Editing by Jason Neely and Alexander Smith)