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PARIS - France's LVMH reported a 1% rise in third quarter sales on Tuesday, helped by improved demand in China as the luxury goods industry grapples with a prolonged slump.

It was the first quarter of slight growth this year for the world's largest luxury goods group, which is seen as a sector bellwether with operations spanning fashion, alcohol and retail.

Sales at the fashion and leather goods division, home to flagship brands Louis Vuitton and Dior and accounting for more than two-thirds of profits, were down 2% versus a year earlier.

The trading update beat a Visible Alpha consensus cited by HSBC that had seen flat overall sales and a 4% decline for the fashion and leather division.

Trends in Asia excluding Japan, a market dominated by China, showed "noticeable" improvement nine months into the business year, LVMH said in a statement.

Quarterly sales at the conglomerate controlled by French billionaire Bernard Arnault, which also owns brands such as jeweller Tiffany, Moet & Chandon champagne and beauty retailer Sephora, rose 1% to 18.28 billion euros ($21.17 billion).

The decline in the group's all-important fashion and leather division in the July to September period marked an improvement from the 9% drop posted after the second quarter.

The luxury sector has undergone a prolonged slump since the winding down of the post-pandemic boom. 

Price hikes, which fuelled profits at labels including Louis Vuitton and Dior in recent years, have weighed on appetite for handbags, especially from less wealthy clients.

Economic factors including U.S. President Donald Trump's tariffs, the continuing real estate crisis in China and a recent surge in gold and silver prices, driving up production costs for jewellery, have added to the headwinds. 

However, the update from the first major player in the $400-billion luxury industry to report third-quarter sales comes as more investors have turned positive on the sector.

Analysts have released a series of optimistic notes, saying brands' push for more affordable products and what Morgan Stanley called a "burst of creativity" from new designers at most houses could mean the worst is over.

LVMH shares are up 13% since the group's last trading update on July 24.

The rally lifted LVMH, which briefly lost its crown as France's most valuable company to rival Hermes this year, back to the top as analysts began seeing positive signs for luxury sales beyond the very high end.