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Tesco turnaround gathers pace under new CEO

(Repeats to fix formatting, no change to text)

* Kantar says Tesco (Xetra: 852647 - news) sales up 1.1 pct in 12 weeks to March 1

* Says Tesco resurgence hurting Asda

* Discounters' growth slowing

LONDON, March 10 (Reuters) - Britain's Tesco posted

its strongest sales performance in 18 months, industry data

showed on Tuesday, adding to evidence that new boss Dave Lewis's

turnaround plan is making an impact as a supermarket price war

intensifies.

Since joining the troubled grocer last September, Lewis has

cut prices on fresh produce and branded goods, improved product

availability and stepped up customer service, seeking to win

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back shoppers who deserted Britain's biggest supermarket chain

for discounters Aldi and Lidl.

Data from market researcher Kantar Worldpanel showed that

Tesco's sales rose 1.1 percent over the 12 weeks to March 1,

suggesting that Lewis's plan may be working.

The increase helped Tesco to arrest its falling market

share, which was down only a tenth of a percentage point to 28.7

percent compared with last year.

Shares (Berlin: DI6.BE - news) in Tesco are down a quarter year on year but are up

37 percent over the past three months on recovery hopes. They

were flat on Tuesday.

Though Aldi and Lidl recorded sales increases of 19.3

percent and 13.6 percent respectively, their growth has been

slowing in recent months.

Kantar said that Tesco's resurgence has had an impact on

Asda, Britain's second-biggest supermarket chain, which competes

for many of the same shoppers as Tesco. Asda sales fell 2.1

percent, taking its market share down half a percentage point to

17 percent.

Last month Asda, the British arm of U.S. group Wal-Mart

, blamed a fall in its sales on the unprecedented use of

discount vouchers by its rivals among the so-called Big Four

grocers and warned that the practice was unsustainable.

Sales at Sainsbury's and Morrisons, the

third and fourth-biggest players, fell 0.5 percent and 0.4

percent respectively.

Last month's Kantar data had showed Tesco increasing its

sales for the first time since January 2014.

Kantar said that the overall grocery market increased sales

by 1.1 percent in the 12-week period, while deflation reached a

new low of minus 1.6 percent as price competition between the

rivals continued.

"All of the major supermarkets are cutting prices to win

shoppers, especially within everyday staples such as eggs,

vegetables and milk," said Fraser McKevitt, head of retail and

consumer insight at Kantar Worldpanel.

He noted that a combination of lower general inflation and

the grocery price war had saved shoppers 400 million pounds

($603 million) in the past 12 weeks.

Market share data (percent)

12 wks to 12 wks to Percentage

March 1, March 2, change in

2015 2014 sales

Tesco 28.7 28.8 1.1

Asda 17.0 17.5 -2.1

Sainsbury 16.8 17.0 -0.5

Morrison 11.0 11.1 -0.4

Co-op 5.9 6.1 -2.1

Waitrose 5.2 5.0 4.9

Aldi 5.0 4.3 19.3

Lidl 3.5 3.1 13.6

Iceland 2.2 2.2 -0.5

($1 = 0.6629 pounds)

(Reporting by James Davey; Editing by Neil Maidment and David

Goodman)