* FTSEurofirst 300 index gains 0.1 percent
* DAX up 0.3 percent after retail sales data
* Greek shares recover after sharp falls
By Atul Prakash
LONDON, Jan 30 (Reuters) - The pan-European FTSEurofirst 300 index edged higher on Friday and headed for its best monthly performance in three years, with positive German retail sales data improving sentiment and helping the benchmark DAX index.
The FTSEurofirst 300 was up 0.1 percent at 1,473.99 points by 0850 GMT. The index has gained 7.7 percent in January, its best month in percentage terms since late 2011, on expectations of a bond-buying programme by the European Central Bank, which was finally announced earlier this month.
Germany's DAX, up 0.3 percent, outperformed the pan-European index after data showing German retail sales increased for a fifth consecutive year in 2014, rising by 1.4 percent in real terms, reflecting the buoyant mood among consumers in Europe's largest economy.
The figures follow Thursday's data showing Spanish retail sales leapt 6.5 percent year-on-year on a calendar-adjusted basis in December, the biggest increase since 2003.
"Retail sales in Germany and Spain, as well as consumer spending in France, are above expectations. These are the first signs for the positive impact from low oil prices and are a good support for equities," Christian Stocker, equity strategist at UniCredit in Munich, said.
Data also showed on Friday French consumer spending jumped 1.5 percent in December.
However, investors stayed cautious due to lingering uncertainty in Greece, analysts said.
European Commission Vice President Jyrki Katainen urged Greece's new government to stick to the reforms agreed with international lenders, but signalled Athens could be offered more time to reach certain goals.
The left-wing Syriza party won Sunday's election on promises to end austerity imposed under Greece's 240-billion-euro bailout deal and restructure the country's huge debts.
Greece's ATG index rose 1.8 percent on Friday after sharp falls in recent days, with Bank of Piraeus jumping 12 percent after touching an all-time low earlier this week and Alpha Bank gaining 8 percent. The ATG index is still down 11 percent so far this week.
Among individual sharp movers, Swedish hygiene and paper products maker SCA rose 7.9 percent after posting a bigger than expected rise in core fourth-quarter profit despite higher raw material costs and headwinds from a stronger dollar.