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McDonald's sales rise 2.6%

CHICAGO / LOS ANGELES (Reuters) - McDonald's Corp posted an expectations-topping 2.6 percent increase in January sales at established restaurants, as overseas results overshadowed a sluggish performance in the United States.

Sales at restaurants open at least 13 months fell 0.7 percent in the United States, while those in Europe and in the Asia/Pacific, Middle East and Africa (APMEA) region both rose 4.3 percent, McDonald's said yesterday.

Analysts were expecting a 1.4 percent overall rise in same-store sales for January. Europe and APMEA each topped Wall Street expectations, while the US fell short of the flat January same-store sales result analysts' had expected, Bernstein Research analyst Sara Senatore said in a client note.

Earlier this month, McDonald's chief executive Jim Skinner said US same-store sales would be flat to slightly down for January due to severe winter weather. He added that bad weather days saw a sales drag of about three percent.

Despite the weather-affected January lull, Skinner said the December increase in US same-store sales was a "sustainable result" in the longer term. Just a few weeks ago, McDonald's surprised analysts by announcing a one percent increase in December US same-store sales after two months of declines.

McDonald's executives previously said that US sales benefited from the January national debuts of the breakfast Dollar Menu and the Mac Snack Wrap — a new spin on its popular Big Mac hamburger that sells for around $1.50 — as well as McCafe coffee drinks and the premium-priced Angus Burger.

The company said yesterday that Europe's gain was fuelled by France, United Kingdom and other markets, offset partly by Germany. The Asia/Pacific region was boosted by demand in Japan and Australia, partly offset by what it called difficult comparison in China.

For the early part of the US recession, McDonald's and some other fast-food chains benefited when the global economic downturn sent customers to lower-priced fare.

But that so-called trade-down effect is no longer strong enough to offset weaker spending by young men and minority groups, who account for a large number of fast-food customers and have unemployment rates much higher than the overall US jobless rate of 9.7 percent.

Nevertheless, McDonald's said yesterday that its US results still outperformed those of its fast-food rivals.

McDonald's reported a 0.1 percent rise in US same-store sales for the recent fourth quarter.

Rival Burger King said earlier this month said same-store sales for the United States and Canada fell 3.3 percent during its quarter ended December 31.

Yum Brands Inc, the parent of KFC, Pizza Hut and Taco Bell, posted an eight percent drop in US same-store sales in its latest quarter ended on December 26.