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BUZZ-Sainsbury: Q2 sales drop, sees tough market persisting

** Supermarket Sainsbury's shares down 3 pct in volume, bottom of FTSE 100, after Q2 LfL sales fall 1.1 pct excluding fuel

** CEO Mike Coupe says market will remain competitive, but adds co is positioned to outperform peers

** Stock set for worst day in nearly three months, down about 6 pct this year

** Rivals Tesco, Morrison slightly higher on the day

** SBRY second-largest loser on Stoxx and bottom of the Stoxx 600 Retail Index (venkateshasoumithri.mamidipudi.thomsonreuters.com@reuters.net)