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China causes like-for-like sales to slow sharply in Q3

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Sees positive signs of recovery in China in January

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Shares rise 2.7%

LONDON, Jan 18 (Reuters) - Britain's Burberry is seeing "very promising" signs of recovery in China as the disruption from COVID-19 lockdowns and infections that caused a sharp slowdown in its growth before Christmas has started to recede.

The luxury brand's like-for-like sales grew 1% in the three months to end-December, after a 23% fall in mainland China, its biggest market before the pandemic, largely offset higher spending by U.S. tourists and locals in Europe.

The growth was half the 2% level expected by analysts, and represented a slowdown from 11% Burberry had reported for the previous quarter.

Chief Financial Officer Julie Brown said Burberry, which is known for its trench-coats and black, red and camel check, had been impacted by lockdowns in China for nine months followed by a surge in infections in December.

But she said there were positive signs of recovery as stores reopened in mainland China and the country's luxury shoppers started returning to Hong Kong and Macau.

"In January, we've seen a change in traffic, we've seen some strong trade coming through," she told reporters on Wednesday.

"The timing and pace of recovery is likely to be somewhat unpredictable, but we're very positive about the early signs and confident in the long-term opportunity (in China)."

Chinese consumers accounted for about 25% of Burberry's revenue, down from 40% pre-pandemic, she said, with the vast majority of spending happening in mainland China rather than in tourist centres outside the country.

Richemont, the Swiss luxury group that sells Cartier jewellery and watches, also said on Wednesday that it expected a strong rebound in China.

Burberry, which will show its new designer Daniel Lee's first collection next month, continued to perform well in Europe.

Brown said strong trading over the festive period in cities such as Paris and Milan resulted in 19% like-for-like growth in the region in the 13 weeks to end-December.

Comparable sales in the Americas fell 1% in the quarter, but she said that was an improvement quarter-on-quarter and Burberry had seen stronger demand in December.

Its shares, which have risen 28% in the last 12 months, reversed early losses to trade up 2.7%. (Reporting by Paul Sandle; editing by Sarah Young and Jane Merriman)