Britain's battered Tesco sees sales finally turn higher

* Kantar says Tesco (Xetra: 852647 - news) sales up 0.3 pct in 12 weeks to Feb. 1

* Tesco outcome is first growth since Jan. 2014

* But market share down again, 0.2 pct points to 29 pct

* Overall grocery UK grocery market up 1.1 pct

By James Davey

LONDON, Feb 10 (Reuters) - Britain's biggest supermarket has

recorded its first sales rise since January 2014, data showed on

Tuesday, suggesting attempts by Tesco's new boss to restore an

image dented by a price war with discounters and an accounting

scandal may be bearing fruit.

Chief Executive Dave Lewis has cut prices on fresh produce

and branded goods, as well as improving customer service and

product availability, in an attempt to win back the customers

that have deserted it in droves for cheaper rivals Aldi

and Lidl.

Shares (Berlin: DI6.BE - news) in Tesco rose 2.7 percent on Tuesday after

data from Kantar Worldpanel, an industry market researcher, said

its sales nudged up 0.3 percent over the 12 weeks to Feb. 1 when

compared against the year-ago period.

That small rise nonetheless considerably outperformed Asda

, Sainsbury's and Morrisons, where sales

fell 1.7 percent, 1.0 percent and 0.4 percent respectively.

"Tesco is bouncing back from a tough year, with Dave Lewis's

efforts to overhaul the supermarket attracting an additional

236,000 shoppers into its stores in the last 12 weeks," said

Fraser McKevitt, Kantar's head of retail and consumer insight.

In addition to changes on the shop floor, Lewis also

announced last month that he would slash internal costs and sell

assets to mend the company's finances and fight back from years

of market share losses and debt-ratings downgrades.

He still has a way to go regarding Tesco's market share,

which Kantar said fell 0.2 percentage points to 29.0 percent as

discounters Aldi and Lidl continued to gain ground, with sales

growth of 21.2 percent and 14.2 percent respectively.

However, the positive sales news follows a

better-than-expected Christmas for Tesco, which said in January

it had seen volume growth over that period for the first time in

five years.

Analysts at Barclays (LSE: BARC.L - news) concluded the back-to-back figures

suggested "The longer-term trends (for Tesco) are clearly more

encouraging than they have been for some time."

Overall spending in Britain grocery market grew at its

fastest rate since June 2014, up 1.1 percent over the 12 weeks,

while like-for-like prices fell by 1.2 percent.

"Shoppers are taking advantage of both lower fuel prices and

the continuing price war among the supermarkets to slightly

increase their grocery spending," said McKevitt.

Elsewhere in the sector, shares in Morrison jumped 6.2

percent after its sales performance, though down, hit its best

level since December 2013.

Alongside Tesco, Sainsbury's and Morrisons also published

Christmas trading updates last month. Both came in ahead of

analysts' forecasts. Asda will update on its fourth quarter on

Feb. 19.

Market share and year-on-year sales growth (percent)

12 wks to 12 wks to pct change

Feb. 1 2015 Feb 2 2014 in sales

Tesco 29.0 29.2 0.3

Asda 16.9 17.3 -1.7

Sainsbury 16.7 17.1 -1.0

Morrison 11.1 11.3 -0.4

Co-operative 5.9 6.1 -2.7

Waitrose 5.2 4.9 7.2

Aldi 4.9 4.1 21.2

Lidl 3.5 3.1 14.2

Iceland 2.2 2.3 -0.5

(Additional reporting by Neil Maidment; Editing by Sophie

Walker)