FTSE edges lower as rising competition hurts BT

* FTSE 100 index falls 0.2 percent

* BT falls on Sky's plan to launch new sports channel

* Growth-sensitive stocks among top decliners

By Atul Prakash

LONDON, June 10 (Reuters) - Britain's top share edged lower on Tuesday after coming close to a record high in the previous session, with telecom operator BT Group (LSE: BT-A.L - news) falling sharply following news of rising competition in the sector.

BT Group fell 2.2 percent, the biggest decliner on the blue-chip FTSE 100 index, after news that Britain's largest pay-TV company BSkyB will launch a television channel dedicated to European football.

Customers with Sky Sports will be able to receive the new channel, Sky Sports 5, as part of their sports package at no extra cost and get two years' free broadband connection, Sky Sports said on its website.

"It's bad for BT, in terms of potential erosion of current rate of customer acquisition, which had been benefiting from free sports with broadband," said Mike van Dulken, head of research at Accendo Markets.

"With Sky now countering this with a free broadband for existing customers, BT may see less Sky customers jumping ship in the 2014/15 season before it begins broadcasting the all-important Champions League in 2015/16."

Commodity-related stocks including oil firms and miners, combined with financials and telecoms, took about 17 points off the benchmark FTSE 100 index, which was down 12.79 points, or 0.2 percent, at 6,862.21 by 1519 GMT. The index is less than 2 percent off its all-time high, set in December 1999.

The pullback kept the FTSE 100 in the 130-point range it has traded in since the beginning of May, at a time when other indexes including the S&P 500 and Germany's DAX have pushed on to new all-time highs.

"We have seen a very strong performance over the course of the past few months and it is understandable that investors are nervous in the short term as valuations are no longer cheap as they used to be and U.S. stimulus is gradually being withdrawn," said Henk Potts, equity strategist at Barclays Wealth.

"But the market's outlook remains positive in the medium- to longer-term term. Earnings growth still remains very strong and that should be supportive for valuations. We believe in the strength and speed of the economic recovery."

Among other fallers, Sports Direct (Frankfurt: A0MK5S - news) dropped 1.3 percent after Goldman Sachs (NYSE: GS-PB - news) removed it from its "conviction buy" list, citing its recent strong performance. It has gained 65 percent since last June, but is still about 33 percent below Goldman's target price of 1,100 pence.

"We remove Sports Direct from our Conviction List as the upside to our target price is now lower following a period of good performance," analysts at Goldman Sachs wrote.

"We have higher conviction elsewhere in the European retail sector as a result." (Additional reporting by Alistair Smout; Editing by Andrew Roche)