* Christmas retail sales strong, trade gap narrows
* House prices rise again but pace moderates - RICS
* Chambers of Commerce cautious on recovery prospects
* Graph of trade gap vs sterling http://r.reuters.com/jaw92h
By Matt Falloon and David Milliken
LONDON, Jan 12 (Reuters) - Britain's economy probably emerged from its longest recession on record at the end of last year, figures indicated on Tuesday, though big question marks remain over how strong or sustained the recovery will be.
Encouraging Christmas sales reports from the British Retail Consortium and Britain's biggest retailer Tesco suggested consumer confidence was surprisingly strong and house prices continued to grow in December, albeit at a slower pace.
Britain's trade gap with the rest of the world also narrowed more than expected in November while the British Chambers of Commerce said fourth quarter GDP would probably be positive.
However, BCC chief economist David Kern was far from optimistic.
"It's clear the economy is struggling to get out of recession," he said, in comments accompanying the BCC's quarterly economic survey. "There is a significant risk of a double dip and avoiding that is the main policy priority."
Britain's economic recovery has lagged other major economies even though the Bank of England has slashed interest rates to a record low of 0.5 percent and unleashed a 200 billion pound asset buying programme to boost demand.
The Labour government, predicted to lose a parliamentary election due by June, has also offered extensive financial support to the crippled banking system and struggling consumers and businesses.
The government, BoE and most analysts think the economy did start to grow at the end of last year but most experts expect a sluggish year ahead as banks seem unlikely to return to the volume of lending that helped spur growth before.
CHRISTMAS SALES SPREE
However, a dearth of credit did not stop consumers splashing out at Christmas.
Retail sales values grew 4.2 percent on a like-for-like basis in December and 6 percent when new store space was included, the British Retail Consortium said, reporting the strongest high street performance since April.
"These are stronger figures than we dared hoped for," said BRC director-general Stephen Robertson.
Supermarket giant Tesco enjoyed its best Christmas for three years although it remained cautious about the outlook, and smaller retailers such as computer game store Game and and Debenhams fared less well.
House prices rose in December, according to the Royal Institution of Chartered Surveyors, but the pace of growth slowed from November's three-year high and a regional breakdown showed weakness in much of the country outside the hotspots of London and southeastern England.
A narrowing of Britain's goods trade gap with the rest of the world in November also surprised some analysts, with the deficit with non-EU countries at its smallest in four years.
But the gap with Britain's main trading partner, the European Union, grew to its widest in two years and the overall improvement failed to impress other commentators who are still waiting for the beneficial effects of a weaker pound to show.
Policymakers want to see future growth driven by exports, rather than the consumer credit-led boom of most of the previous decade and have consistently argued that weaker sterling should help with that switch.
"We are still hopeful that exports will increasingly benefit from sterling's weakness and improving global growth and trade, and lead to net trade making a positive contribution to UK growth in 2010," said Howard Archer, an economist at Global Insight.
"Nevertheless, the process is still proving disappointingly slow."
* For a TABLE of trade data, see
(Additional reporting by Fiona Shaikh; editing by John Stonestreet)