Kingfisher Share News (KGF)

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* FTSE 100 down 0.4 pct

* Retail stocks lead losses

* Moss Bros sinks 20 pct after profit warning

* Kingfisher bottom of FTSE 100

* FTSE 350 Retailers index lowest since Brexit

By Tom Pfeiffer

LONDON, March 21 (Reuters) - British shares fell onWednesday as Kingfisher and Moss Bros piledmore bad news on a UK retail industry reeling from the surge ine-commerce.

Share declines accelerated after data showed Britishworkers' pay had risen at the fastest pace in nearly two and ahalf years. That pushed up the value of the pound and hit sharesin big multinationals and exporters.

Any end to the long squeeze on UK household incomes was notshowing through in the retail industry on Wednesday, however.

Formal clothing chain Moss Bros lost a fifth of its marketvalue after a profit warning it blamed on supply chain problemsand fewer customers in its stores. Home improvement chainKingfisher also reported a recent deterioration in trading.

The FTSE 100 index was down 0.53 percent at 1028GMT, with Kingfisher falling 8 percent to its lowest level sinceNovember. Among other retailers, clothing chain Next wasdown 1.2 percent and Primark owner ABF fell 1.1 percent.

After holding steady in January and February, UK retailershares have tumbled 9 percent this month, outpacinga 3 percent drop in the wider FTSE 350 index. The retailindex is at its lowest since the aftermath of the Brexit vote.

Underscoring the increasing power of online retail, U.S.ecommerce giant Amazon overtook Google owner Alphabetby market value on Tuesday.

Multinationals such as BAT, Diageo andUnilever helped pull down the FTSE as the pound rose0.4 percent against the dollar following the wage growthnumbers.

Morgan Stanley strategists had been forecasting strong datathat would pave the way for the Bank of England to deliver ahawkish statement when it meets on Thursday.

"It has been well established that a number of Bank ofEngland officials are expecting wages to start outstrippingheadline inflation in the coming months, and a strong averageearnings number today could well reinforce that narrative, andraise expectations of a move on rates in May, irrespective ofyesterday’s softening in headline CPI," said Michael Hewson,Chief Market Analyst at CMC Markets UK.

Investors were also awaiting the conclusion of a U.S.Federal Reserve meeting for signals on the pace of expectedinterest rate rises.(Reporting by Tom Pfeiffer, Editing by Helen Reid)