Supermarkets hit as FTSE 100 retreats

Reuters - UK Focus

* Supermarket retailers fall as survey shows market share loss

* Sainsbury (Frankfurt: SUY1.F - news) falls 3.5 pct after Kantar survey

* Fed tapering uncertainty also weighing on stock market

* FTSE 100 down 0.4 pct in late session trading

By Sudip Kar-Gupta

LONDON, Dec 17 (Reuters) - Britain's main equity index fell on Tuesday, with major supermarket groups hit by fresh signs of a loss of market share, while uncertainty over future U.S. monetary policy also weighed on the stock market.

The blue-chip FTSE 100 index fell by 0.4 percent, or 26.77 points, to 6,495.73 points in late session trading, retreating after a 1.3 percent gain on Monday.

Supermarket retailers were among the worst-performing FTSE stocks after a survey from market researcher Kantar Worldpanel showed that more than half of Britain's households shopped at German discount grocers Aldi or Lidl over the past 12 weeks.

The data showed that the UK's "big four" supermarkets - Tesco (Berlin: TCO.BE - news) , Sainsbury, Wal-Mart's Asda and WM Morrison - had continued to lose market share.

Shares in Sainsbury fell 3.5 percent to the bottom of the FTSE 100 index while WM Morrison dropped 2.4 percent and Tesco (Frankfurt: TS3.F - news) declined by 1.7 percent.

"The top supermarket firms are losing market share at the bottom end to Aldi and Lidl, and losing out at the top end to Waitrose," said Hartmann Capital trader Basil Petrides.

UNCERTAINTY OVER FED TAPERING

A further factor weighing on stock markets was a U.S. Federal Reserve meeting, starting on Tuesday and ending on Wednesday, at which the Fed may start to scale back an economic stimulus programme that has driven much of this year's global equity rally.

The majority of investors and economists expect the Fed to wait until March 2014 to begin winding down its "quantitative easing" (QE) programme.

However, stronger-than-expected U.S. economic data, along with last week's budget deal in Washington, have led some to speculate the Fed may act this week.

"People have taken some gains off the table prior to the Fed meeting," said JNF Capital trader Rick Jones.

However, Jones felt the pullback was a chance to buy stocks cheaply. He expected equity markets to rise again in 2014 as the global economy gains momentum.

Jones expected the FTSE 100 to end 2013 in the 6,700-6,900 point range, with the FTSE still up by around 10 percent since the start of 2013.