By Paul Sandle

LONDON, Jan 8 (Reuters) - Britain's Marks & Spencer saw strong demand for its upmarket food at Christmas, but shoppers spent less on fashion, home and beauty in its stores, compounding the lingering impact from last year's cyber hack.

Chief Executive Stuart Machin said a record number of customers shopped with M&S, driving a 5.6% rise in like-for-like food sales in the quarter to December 27 year-on-year and a return to growth online in clothing.

"Food sales were strong and the business continues to outperform, hitting a new market share milestone in the period," he said on Thursday.

"Fashion, Home & Beauty is getting back on track as we work through the tail end of recovery."

Sales of clothing in its stores fell, reflecting subdued consumer confidence, milder weather and residual cyber hack-related stock issues, M&S said.

Overall, like-for-like sales in fashion, home and beauty were down 2.9%

Shares in M&S were up 3% in early deals Thursday, paring losses over the last year to 10%.

AJ Bell's head of markets Dan Coatsworth said M&S had gone back to its old days, where strong food sales offset weak clothing.

"The clothing arm had a poor festive period, and it was telling that M&S held a bigger than usual Sale to help clear stock," he said.

"It didn't help that high street footfall was weak in general, meaning that M&S missed on valuable passing trade which typically helps to keep the tills ringing."

In November, M&S said it would have fully recovered from April's cyber hack by the end of its year to March 2026, forecasting second-half profit "at least" in line with last year.

It said on Thursday its full-year guidance was unchanged.

Its profit in the first half slumped 55.4%, after the shutdown of its online operation caused fashion, home and beauty sales to slide 16.4%.

(Reporting by Paul Sandle and James Davey; Editing by Kate Holton and Sarah Young)