LONDON MARKETS: Sainsbury, Vodafone Lead London Stocks Lower

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- U.K. equities slipped Tuesday, with market heavweight Vodafone Group PLC falling following a warning that its credit rating may be cut, but an advance in grocery chain J Sainsbury PLC helped limit the FTSE 100's losses.

The FTSE 100 Index shed 0.3% to 6,549.28, taking back a portion of Monday's 0.6% gain that marked the index's first winning session in six days.

Shares of Vodafone Group PLC stepped back 0.9% after Fitch Ratings said it may downgrade the wireless firm's rating by one notch if it purchases Spanish cable firm Ono SA without taking other measures to reduce debt.

Vodafone's leverage is low for a 'A-' rating, said Fitch, with funds from operations adjusted net leverage expected to be 1.2 times at the end of March. But the planned deal with Ono, and Vodafone's Project Spring investment program over the next few years, "could push this metric to above 2.5x within 18 months, which is the upper end of the leverage range for a 'A-' rating."

Vodafone shares climbed 1.7% on Monday following news of the planned acquisition.

Among other stocks, J Sainsbury PLC came off intraday lows to turn 0.7% higher, with the company able to hold on to its 17% market share at the same time that quarterly sales declined. In the 10 weeks to March 15, Sainsbury posted a 1.5% fall in total sales, and excluding fuel, total sales were down 1% during the period.

Sainsbury's figures follow last week's below-anticipated projection from Wm. Morrison Supermarkets PLC that underlying profit for the fiscal year 2014-2015 will drop between 460 million pounds ($764 million) and GBP510 million. Morrisons shares on Tuesday were down 1%. At the same time, shares of Tesco PLC edged up 0.2%.

Off the FTSE 100 Index, stock in Asos PLC slid 20% as the online fashion company's raised capital expenditure plans will likely pressure its yearly earnings.

Elsewhere in London, the Bank of England named three new senior officials to join the central bank. Among them is Ben Broadbent, who will become deputy governor of monetary policy.

More news from MarketWatch:

Fed set to roll out new low-rate pledge

Are investors preparing for a correction?

Watch 1,000 years of European shifting borders via time lapse

Subscribe to WSJ: http://online.wsj.com?mod=djnwires