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* CEO Clarke says will see through his plan after calls toquit
* Reports 6 percent fall in annual group trading profit
* Takes 734 mln stg charge on European business, 540 mln onChina
* UK underlying sales fell 3 percent in fourth quarter (Adds details)
By Neil Maidment and Kate Holton
LONDON, April 16 (Reuters) - Tesco boss PhilipClarke vowed to win back shoppers with millions of pounds ofprice cuts after a second year of falling profits cast doubt onhis efforts to turn around the fortunes of Britain's biggestretailer.
Despite calls from investors to quit or change tack, withseveral worried about a price war, Clarke insisted he would seethrough his "bold" plan to rebuild the company, which had beenthe darling of the sector during two decades of uninterruptedearnings growth before a shock profit warning in 2012.
Tesco shares, at 10-year lows, jumped 5 percent in earlytrade as Clarke said he would respond to the discount groups andupmarket grocers that have hit Tesco from both sides and sentits British market share to a near 10-year low of 28.6 percent.
"I have got no intention of going anywhere," Clarke, a40-year Tesco veteran, told reporters. "All my waking hours arespent running Tesco. It's what I love. I am going to see thisthing through."
One of Tesco's largest 20 investors was reported on Tuesdayas having called Clarke the "wrong person for the job" with the"wrong strategy".
Another shareholder told Reuters the strategy of cuttingprices now to compete with increasingly popular discounters Aldiand Lidl was a "shambles", arguing that with wages improving itshould instead focus on improving service.
Tesco, the world's third-largest retailer, with a marketvaluation of 23 billion pounds and 530,000 staff, has sufferedon several fronts in recent years.
Overseas, failed attempts to break into the United Statesand Japan and troubles in China and Europe have proved adistraction to its home market, where it still makes overtwo-thirds of sales.
Alongside a 6 percent fall in annual group trading profitposted on Wednesday, Tesco took a 734 million pound writedown onthe value of its European businesses, where trading has slowed,and a one-off charge of 540 million pounds in China. That putscharges and writedowns for its overseas forays at close to 3billion pounds in two years.
At home, despite Clarke's spending billions on improvingservices and stores, things have yet to improve, and the firmabandoned its industry-leading margin target two months ago.
A 3 percent decline in underlying UK sales for its fourthquarter was the worst quarterly drop since he took the top jobthree years ago.
PRICE WAR?
"The results aren't pretty, but they are possibly slightlybetter than some had been expecting," one of the firm's top 20investors told Reuters on condition of anonymity. "Tesco mightget a little respite from the recent relentless negativity.
"I'm not in the mob of people clamouring for Clarke's head.I am keen that the company adopts a less expansionary strategyand doesn't start a price war in the UK."
In common with Britain's three other leading grocers -Wal-Mart's Asda, Sainsbury's and Morrisons -Tesco has been squeezed between hard discounters Aldi and Lidland by Waitrose and Marks & Spencer at the premium end.
Facing the slowest rate of growth in the British marketsince 2005, Clarke said customers would see prices coming downand stores modernised at a faster rate than initially planned.
"We have a big and bold plan, and customers are going to getbetter value from Tesco during 2014," he told reporters. Hedeclined to put a price on the scale of the cuts that will beadded to a 200 million pound programme announced in February.
"200 million was just the start, you'll see more coming," hesaid.
The plans at Tesco, which among global retailers trails onlyCarrefour and Wal-Mart, will do little to easeindustry fears of a price war in Britain, with both Asda andMorrison having each committed to spending 1 billion pounds onprice cuts.
Clarke described Aldi and Lidl, which have managed salesgrowth of 35.3 percent and 17.2 percent, respectively, as "veryformidable" and said while it was hard to match their prices itwould ensure it stayed competitive on keyproducts.
He added that recent price cuts of 24 percent on key linessuch as milk, eggs and chicken had boosted volumes by 30percent.
UNDER PRESSURE
Tesco's problems in its stores have been compounded bytroubles in the boardroom, with finance chief Laurie McIlweeannouncing his resignation this month, leaving Clarke as theonly executive director on Tesco's board.
McIlwee, who will stay in the job until a replacement isfound, denied reports on Wednesday that he had clashed withClarke over strategy.
"Whether today marks the nadir of Tesco's fortunes remainsto be seen, as the beleaguered behemoth remains under pressure,"said Richard Hunter, head of equities at Lansdown Stockbrokers.
"The encroachment of the discounters in the grocery space,cut-throat margins and difficult trading conditions both homeand abroad have conspired to put Tesco in the full glare of thebears, and the accompanying management outlook comments seem toecho that the recovery is a long-term plan."
Trading profit for the year to Feb. 22 was 3.3 billionpounds, in line with forecasts. The dividend was kept at 14.76pence a share.
Overseas, group trading profit was down 5.6 percent in Asiaand down 28 percent in Europe, with a slump in trade in theCzech Republic, Hungary, Poland, Slovakia, Turkey and Ireland.
Many retailers across Europe have been struggling asshoppers' disposable income is squeezed by subdued wage growthand austerity measures, and most have responded with price cuts.
Last year, having pulled out of the U.S. after six yearsspent trying to crack it, it merged its business in China withthat of China Resources Enterprise Ltd.
Group underlying pretax profit fell 6.9 percent to 3.05billion pounds in the year, and according to Reuters data willfall 5.8 percent to 2.87 billion for its 2015 fiscal year. ($1 = 0.5977 British Pounds) (Additional reporting by Chris Vellacott; Editing by WillWaterman)
