LONDON (Reuters) - Budget fashion chain Peacocks added to signs of a robust Christmas for retailers, helped by its tie-up with singer-turned-designer Pearl Lowe, and said Sunday 10 January it planned to step up its expansion.

Photo: www.peacocks.co.uk

The firm, taken private in 2005 by a consortium including U.S. hedge funds Perry Capital and Och-Ziff, said sales at stores open at least a year rose 8 percent in the eight weeks to January 2, including 17 percent growth from December.

Peacocks said it planned to open around 40 stores in 2010-11, up from around 30 in 2009-10.

Peacocks, which currently trades from 546 stores in Britain and also has 84 franchises abroad, reported strong demand online and for a range of dresses produced in collaboration with Lowe.

The group said it planned further ranges with Lowe for the spring/summer season.

Peacocks adds to a growing list of retailers, including fashion chain Next, grocer J Sainsbury and department store group John Lewis, to report strong Christmas sales.

However, shopkeepers have also sounded a cautious tone about the coming year, warning that steps to cut government debt -- likely to include higher taxes and lower public spending -- could hold back a consumer recovery.

(Reporting by Mark Potter; Editing by Dan Lalor)