* FTSE 100 at lowest level since early August
* Sainsbury cuts sales forecast and puts dividend on review
* Regulators probe Tesco
By Sudip Kar-Gupta
LONDON, Oct 1 (Reuters) - Britain’s top equity index fell to its lowest level in nearly two months on Wednesday, as a new slump in the shares of supermarket retailers hit the market.
Sainsbury fell 4 percent after the supermarket operator cut its annual sales forecast and put its dividend under review, while rival Tesco also weakened after it said it was under investigation by regulators.
The investigation into Tesco comes after an accounting scandal that has wiped nearly 4 billion pounds ($6.5 billion) from its market capitalisation over the past week and a half.
“Dire news from the supermarket sector shows that investors should still be looking elsewhere. Any rally in supermarket shares will be an invitation for fresh selling,” said IG market analyst Chris Beauchamp.
The blue-chip FTSE 100 index was down by 0.4 percent, or 27.60 points, at 6,595.12 points by the middle of the trading day - its lowest level since early August.
The FTSE is down by around 2 percent since the start of 2014, underperforming a gain of around 5 percent on the broader pan-European FTSEurofirst 300 index.
Some traders expected the FTSE to make little progress over the coming month, with FuturesTechs’ analyst Clive Lambert forecasting more weakness. (1 US dollar = 0.6175 British pound) (Additional reporting by Francesco Canepa; Editing by Robin Pomeroy)