Britain's Asda sales fall 1.3% in Christmas quarter

LONDON, Feb 18 (Reuters) - Asda, the British supermarket arm of the world's biggest retailer Walmart, reported a fall in underlying sales in its Christmas quarter, blaming a challenging trading environment.

The group, whose attempt to combine with rival Sainsbury's was blocked by Britain's competition regulator in April, said on Tuesday comparable sales fell 1.3% in its fiscal fourth quarter. That compared with a third quarter decline of 0.5%.

Asda also said its gross profit rate, or margin, decreased, reflecting strategic price investments, discounting in the apparel market and a shift in mix towards lower margin categories. (Reporting by James Davey; editing by Sarah Young)