Britain FTSE 100 edges lower as Tesco's woes mount

* Blue-chip FTSE 100 index down 0.2 percent

* Tesco (Xetra: 852647 - news) falls after cutting full-year profit outlook

* Unilever (NYSE: UL - news) drops after lower-than-expected sales

* Estate agency Foxtons slumps more than 17 percent

By Atul Prakash

LONDON, Oct 23 (Reuters) - Britain's top equity index edged lower in late trading on Thursday, with a slump in the share prices of supermarket operator Tesco and consumer goods group Unilever hurting sentiment.

Unilever fell 3.3 percent after reporting a weaker-than-expected 2.1 percent rise in third-quarter sales on a slowdown in emerging markets.

The blue-chip FTSE 100 index, which has recovered slightly after hitting 15-month lows last week, was down 0.2 percent at 6,386.79 points by 1354 GMT. The index has fallen around 6 percent since the start of 2014.

Tesco was the worst-performing FTSE 100 stock, down 7.7 percent, after reporting a bigger than expected hole in its accounts. It found that mistakes in booking income had gone back further than initially thought, forcing it to scrap its full-year profit outlook. The stock has fallen around 50 percent this year.

"The lack of any strategy announcement is disappointing," Brewin Dolphin (LSE: BRW.L - news) analyst Nik Stanojevic said. "While the accounting issues are still outstanding, they (shares) could trade lower still. We are also concerned with company stating that it may need to protect and strengthen the balance sheet."

Tesco's woes also dragged down the shares of rival supermarket groups. WM Morrison fell 3.7 percent and Sainsbury retreated 3.6 percent.

The FTSE 350 Food & Drug Retailers index slumped 5.8 percent, extending the sector's total losses so far this year to more than 40 percent.

"Tesco is not in a position to offer full year profit guidance and management states the need to create head room for the future," Shore Capital analyst Darren Shirley said.

"As such there is a further risk of earnings downgrades, to our minds, with management demonstrably signalling that customers must come first."

Property agency Foxtons, which is listed on the mid-cap FTSE 250 index, slumped 17.6 percent after the company said its core earnings would fall due to a sharp drop in demand in the London property market.

The FTSE 100 index hit a peak of 6,904.86 points at the start of September, its highest level since early 2000, but has lost ground since and fell to 15-month lows last week.

Weak economic data has also knocked back European stock markets, with a survey on Thursday showing that a business downturn in France worsened in October.

UK figures also disappointed. Retail sales fell more than expected in September, adding to signs that Britain's economic recovery is losing some of its pace.

"The volatility and uncertainty is here to stay, and we'd look to sell into strength on the FTSE," Central Markets trading analyst Joe Neighbour said. (Additional reporting by Sudip Kar-Gupta; Editing by Alison Williams)