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** Tesco's sheer size and ongoing turnaround could see itnudge ahead of other large UK supermarkets getting squeezed byup-market chains and hard discounters, according to Smith &Williamson fund manager Mark Swain
** Swain, a co-manager of firm's long/short Enterprise fund,closed short position in Tesco (earlier this yr), stillshort Morrisons & Sainsbury's
** UK's Big Four grocers (including Wal-Mart's Asda )battling over mid-tier mkt which is being squeezed by Waitrose &Marks & Spencer at top & Aldi & Lidl at bottom
** While Swain reckons Tesco probably can't fight top orbottom tier, as market leader has best chance vs mid-tier (canbe price leader & squeeze others)
** In sign Tesco's turnaround under new CEO gathering pace,co recently posted strongest sales performance in 18 mths, &impacted Asda, Kantar said (market awaits info on how price waraffecting margins in April FY)
** Tesco down 16 pct yr-on-yr but up about a third over past3 mths (vs >10 pct YTD gains from Morrisons & Sainsbury's)
** Morrisons, late to move into better-performing parts ofmkt -- convenience stores & online -- most borrowed stock onFTSE 100, followed by Sainsbury's, Markit data shows (RM: tricia.wright1.thomsonreuters.com@reuters.net)
