* Oct retail sales value up 5.9 pct y/y, volume up 5.2 pct y/y
* Jan-Oct retail sales value up 10.6 pct y/y, volume up 9.1 pct
* Oct tourist arrivals rise 11.5 pct y/y, Jan-Oct up 9.7 pct
* External headwinds, weak asset markets to affect sentiment -govt
By Donny Kwok and Twinnie Siu
HONG KONG, Nov 30 (Reuters) - Hong Kong's retail sales growth picked up in October from the prior month, government data showed on Friday, but consumer sentiment could be increasingly clouded by weak asset markets and external factors like the U.S.-China trade war.
Retail sales in October rose 5.9 percent from a year earlier in value terms to HK$39.7 billion ($5.08 billion), marking the 20th month of expansion, helped by a rise in visitor numbers and continued income growth. That compares with a 2.4 percent rise in September.
Strong inbound tourism, especially from China, favourable job and income conditions continue to support the sector, a government spokesman said.
"Consumer sentiment could increasingly be affected by the external uncertainties and weaker asset markets," he said.
In terms of volumes, retail sales grew 5.2 percent in October, compared with a 1.4 percent rise in September.
"We are very conservative and are not very optimistic over the performance for Q4," said Annie Yau Tse, chairwoman of the Hong Kong Retail Management Association. "We see flat growth in Q4 as the negative factors begin to affect the market."
Tse expects a high single-digit growth in retail sales in 2018, and a low single-digit growth for 2019.
Despite this, two major infrastructure projects linking China and Hong Kong; a high-speed railway and a sea-bridge to Zhuhai and Macau, are expected to boost Chinese visitor numbers and the retail sector in the longer run, some analysts say.
Hong Kong's economic growth slowed further in the third quarter and is expected to face additional headwinds amid U.S.-China trade tensions and higher interest rates.
China, meanwhile, delivered a mixed economic report card for October, with domestic consumption starting to slow amid mounting household debt, while the real estate sector - a major driver - continues to cool.
October tourist arrivals to Hong Kong rose 11.5 percent from a year earlier to 5.88 million, according to the Tourism Board. The count of mainland visitors grew 15.4 percent, accounting for 79.1 percent of the total. https://bit.ly/2U0YoXQ
Sales of jewellery, watches, clocks and valuable gifts increased 3.3 percent in October, the data showed.
Growth in medicines and cosmetics rose 14.9 percent from a 4.9 percent rise in September, while department store sales were up 3.5 percent against a revised 1.7 percent rise in September.
Cosmetics chain Sa Sa International saw a sharp rise in first-half profit but warned of weak sentiment. ($1 = 7.8213 Hong Kong dollars) (Reporting by Donny Kwok and Twinnie Siu; Editing by James Pomfret and Gopakumar Warrier)