Last checked at 
* Q4 like-for-like sales, excluding fuel, down 3.1 pct
* Sales fall follows 36 straight quarters of growth
* Firm says confident will outperform peers in year ahead
* Shares up 0.6 pct
By James Davey
LONDON, March 18 (Reuters) - British grocer J Sainsbury's nine-year run of quarterly sales growth came to an endon Tuesday, underlining the pressure on the industry as a battleover prices intensifies in a fragile economic recovery.
Britain's grocery market is growing at its slowest ratesince 2005 due to falling food price inflation and as subduedwages growth keeps consumer spending in check.
The "big four" grocers - market leader Tesco,Wal-Mart's Asda, Sainsbury's and Wm Morrison -are all being outpaced by sales growth at discounters Aldi and Lidl, while upmarket chains Waitrose and Marks & Spencer are also gaining share.
Last week No. 4 supermarket group Morrisons posted itslowest annual profit for five years, issued a huge profitwarning and sparked fears of an industry price war after sayingit would invest 1 billion pounds ($1.7 billion) in price cutsover three years to win back customers from discounters.
Its statement, which followed price cutting moves from Tescoand Asda, wiped over 2 billion pounds off the stock market valueof UK grocery retailers.
Sainsbury's said it would ensure its prices remainedcompetitive and had already dropped them for milk, bread andeggs in response to rivals' recent moves.
"If and when we see that activity come forward we will matchthe prices, we will maintain our price position as we alwayshave done," commercial director Mike Coupe, who will succeedJustin King as chief executive in July, told reporters.
Shares in Sainsbury's, down 21 percent over the last sixmonths, were up 0.6 percent to 313.4 pence at 1135 GMT, valuingthe business at about 5.9 billion pounds.
"Whilst it is not losing out (to the discounters) to thesame extent as its peers, we do not believe that Sainsbury's isblind to the challenge," said Shore Capital analyst Clive Black.
CUT AND THRUST
King said he disagreed with Morrisons CEO Dalton Philips whosaid last week the extent of change the discounters had promptedin the grocery market had not been seen since the late 1950s.
"It's wrong to characterise what's happening as somethingcompletely new because discounters have been ever present in my30 years (career) and there have been times when they've hadsignificantly larger market share than they have today," hesaid, noting discounters had a share of about 12 percent in theearly 1990s compared with 7.5 percent currently.
He said price cuts were "part of the cut and thrust of thismarket," adding: "The only model that grows profit sustainablyin the long term in grocery retail is a growing top line. That'swhat we've achieved for nine years."
Sainsbury's said sales at stores open over a year fell 3.1percent, excluding fuel, in the 10 weeks to March 15, its fiscalfourth quarter.
That compared with analysts' forecasts in a range of down2-3 percent and growth in the third quarter of 0.2 percent.
The firm faced a tough comparative number - a rise of 3.6percent in the same period last year, when it benefited from thediscovery of horsemeat in competitors' products.
The later timing of Easter and Mother's Day also workedagainst it this year.
Prior to the fourth quarter, Sainsbury's had reportedlike-for-like sales growth for 36 straight quarters.
"Although some economic indicators are showing animprovement in the health of the economy, we expect the outlookfor customers to continue to be challenging for the comingyear," the company said.
Sainsbury's said, however, that it was confident itsdifferentiated offer, which includes a focus on own brandproducts and its Nectar loyalty card would allow it tooutperform peers in the year ahead.
The firm's total fourth-quarter sales fell 1.0 percent,excluding fuel.
