* M&S beats forecast with Q3 UK like-for-like sales +2.8 pct
* M&S says consumer incomes under pressure
* Metro CEO sees profit growth accelerating in 2011
* Shares in M&S and Metro firmer after early falls
(Adds details throughout, updates shares)
By James Davey and Victoria Bryan
LONDON/FRANKFURT, Jan 11 (Reuters) - Cold weather bit into Christmas sales at Germany's Metro AG and Britain's Marks & Spencer Plc, with the UK group warning of tough trading ahead as households are squeezed and commodity prices rise.
Retailers across northern Europe were hit by heavy snowfalls over Christmas and data showed overall British retail sales slipped in December.
M&S suffered but managed to beat expectations.
"We continue to expect the trading conditions ahead to be more challenging as consumers' disposable incomes come under pressure from increased VAT rates and the impact of public spending cuts," M&S said on Tuesday.
"In addition, we are facing increased commodity prices and significantly tougher comparatives," it added, voicing fears shared by the wider industry over whether retailers can pass on higher costs for key commodities such as wheat and cotton.
M&S estimated the bad weather cut sales of general merchandise by 3 percent and food by 1 percent.
Metro said snow and ice hit fourth-quarter demand but still expects to post 2010 operating profit of 2.3 billion euros ($3 billion). It sees profit growth accelerating this year, driven by expansion and the effects of its cost cutting and productivity programme, Metro Chief Executive Eckhard Cordes said in a statement.
Metro's full-year sales rose 2.6 percent to 67.3 billion euros ($87.2 billion), missing expectations of a 3.4 percent rise, with only a slight increase of 1.6 percent in the fourth quarter compared with the 4.2 percent which analysts had forecast.
But Metro, which runs cash & carries, consumer electronics stores, supermarkets and department stores, said trading had picked up once the ice thawed.
"Sales trends improved once the recent milder weather kicked in," Cordes said.
M&S shares regained some early losses and were up 0.2 percent at 384.5 pence by 1012 GMT. After an early fall, Metro's shares were 0.2 percent higher at 52.74 euros.
The wider pain being felt by retailers was also reflected in British Retail Consortium figures which showed like-for-like UK sales fell 0.3 percent last month.
SALES DROP
Gap, Debenhams Plc, HMV and Mothercare all blamed the snow for a sales drop during the Christmas trading period. Updates from European retail leaders Tesco and Carrefour SA are due on Thursday.
British homewares chain Dunelm said it was cautious about its trading outlook as it reported a 1.2 percent fall in first-half underlying sales.
But Russian shoppers drove a 39.2 percent rise in 2010 sales at Magnit, the country's biggest food retailer, which predicts a 36 percent revenue rise in 2011.
At Metro, Cordes expects profit growth to accelerate in 2011 as expansion continues and Metro's cost cutting and productivity programme -- launched at the start of 2009, with the aim of improving profit by 1.5 billion euros by 2012 -- take effect.
The group reported profit of 2.2 billion euros in 2008, but this slipped to 2 billion for 2009. According to Thomson Reuters data, analysts on average forecast 2.9 billion euros for 2012, although some feel this consensus is too low.
After opening 100 new stores in 2010, Cordes said Metro would accelerate expansion in Asia, particularly in China with Cash & Carry and its Media-Saturn consumer electronics business.
Metro said fourth-quarter sales at Media-Saturn in Germany were hit by the amount of gift vouchers sold. It only counts revenue from these once they have been redeemed.
M&S, which serves 21 million Britons a week from more than 650 stores and has about 320 mainly franchised shops abroad, said sales at UK stores open at least a year rose 2.8 percent in its third quarter.
Under new CEO Marc Bolland, M&S has stepped up product innovation. In addition to 600 new food lines, including mini steak and ale pies and pork belly squares, Bolland said M&S had also introduced 10 percent more styles in general merchandising. (Writing by Alexander Smith; Editing by Jane Merriman and David Holmes) ($1 = 0.6421 pound = 0.7721 euro)