China data supports European shares

* FTSEurofirst 300 up 0.1 percent

* Miners supported by strong China trade data

* Tesco shares trump M&S after trading updates

LONDON, Jan 10 (Reuters) - European shares were a touch higher on Thursday after more evidence of improving economic conditions in China, though uncertainty ahead of a European Central Bank policy decision later in the session limited gains. The FTSEurofirst 300 was up 0.1 percent at 1,169.06 The index has risen around 3 percent since the start of the year, mirroring gains globally as investors welcomed a U.S. budget deal to avoid a fiscal crunch that had threatened growth in the world's largest economy. "I think there is quite a bit of money sitting at the sidelines at the moment to get into this market but everybody realizes that it's very much overextended," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said. "Everybody would like to see the dip to buy, but ... that is not materializing so that is the catch-22 situation that everyone is in from a very short-term perspective." Meetings by the European Central Bank and the Bank of England will be in the spotlight on Thursday, although the economic picture is not seen as weak enough to prompt fresh stimulus measures from either, with both widely seen announcing unchanged policy. Mining stocks found some strength on Thursday after stronger-than-expected trade data from China, the world's top metals consumer. Iron ore imports in China hit a record high in December, while China's total exports rose faster than expected, indicating some pick-up in global demand, although the figures remained weak historically. "Great data out of China overnight ... If China has indeed bottomed we can see much higher stock prices in the months ahead," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages around $500 million of assets. Retailers presented a mixed picture. Investors were buying up Tesco shares while selling its rival Marks & Spencer on contrasting Christmas sales performances, after M&S's decision to offer fewer discounts failed to reap rewards. "People are going out of Marks and into Tesco," Hartmann Capital trader Basil Petrides, said. Marks & Spencer was among the top FTSEurofirst 300 fallers, off 4 percent, after saying sales of clothing, footwear and homewares slumped 3.8 percent in the 13 weeks to Dec. 29 at UK stores open more than a year. In response, Espirito Santo cut its 2013 and 2014 profit forecasts for the high street retailer by up to 7 percent. The reaction to the M&S update was in stark contrast to that of Tesco. Its shares rose 2.3 percent as it posted the highest sales growth in three years over the highly competitive Christmas period, a year after its profit warning and showing that a turnaround plan was starting to work. Consumer electronics firm Philips was up 3.6 percent, the second-biggest FTSEurofirst300 gainer, after BofA Merrill Lynch upgraded its rating to "buy". Dutch brewer Heineken was a big faller, down 3.0 percent, as the same bank cut its rating for the stock to "underperform". Negative broker comment also weighed on Germany's Fresenius Medical, off 2.7 percent as Credit Suisse downgraded its rating to "neutral".