Asda lags UK supermarket rivals as discounters march on

* Asda third-quarter sales fall 4.5 pct * Aldi and Lidl's UK market share passes 10 percent - Kantar * Asda boss says price cuts to exceed 1 billion pounds * Sainsbury's showing most resilience to discounters (Adds comment from Asda CEO at media briefing) By James Davey LONDON, Nov 17 (Reuters) - Industry data and Asda's own sales numbers underlined its position as the weakest performer among Britain's largest supermarket groups, showing it is suffering most from the rapid growth of discounters Aldi and Lidl.

While Asda, the British arm of Wal-Mart, continues to struggle, Tuesday's data from researcher Kantar Worldpanel showed that Germany's Aldi and Lidl achieved a combined 10 percent of the British grocery market for the first time, having doubled their share in only three years.

"The discounters show no sign of stopping and, with plans to open hundreds of stores between them, they'll noticeably widen their reach to the British population," Kantar Worldpanel's Fraser McKevitt said.

Asda Chief Executive Andy Clarke signalled that the price war waged by Britain's "big four" -- market leader Tesco , Sainsbury's, Asda and Morrisons -- to lure back shoppers from the discounters is likely to intensify next year.

Clarke launched a five-year strategy in 2013 focused on lower prices but eschewing the money-off vouchers touted by rivals.

He said the company would now spend more on price cuts than the 1 billion pounds ($1.52 billion) previously forecast in the plan.

"How much we invest will only continue to rise as we narrow the gap with discounters and widen the gap to the other three," he told reporters.

Clarke, who last week announced that Asda would not participate in "Black Friday" promotions this month, forecast a "tough" Christmas and said that 2016 will remain "very challenging".

Plans announced last month to accelerate investment in larger stores and put expansion on hold elsewhere should get Asda back on track, he said, adding that he is also reviewing Asda's ranges and plans to withdraw about 10 percent of products "to remove duplication".

"We're in this for the long game," he said. "Asda is a business that's got sustainable long-term growth in this market and that's something we can be confident about.

"That may not be the case for all businesses, as we know the market will consolidate." VULNERABLE The price war and commodity-led food price deflation has been largely responsible for falling sales at all of Britain's big four chains.

Asda has declined most of late, partly because it has more customer overlap with Aldi and Lidl in its northern England heartland, where the economy is also growing more slowly than in the south east, where Sainsbury's, Lidl and Waitrose are stronger.

Some analysts view Asda as most vulnerable to improvements at Tesco and Morrisons, both of which have appointed new bosses to lead turnarounds.

Kantar Worldpanel said that Asda's sales fell 3.5 percent in the 12 weeks to Nov. 8, with its market share down 0.7 percentage points year on year to 16.4 percent.

Separately, Asda reported third-quarter sales at stores open for more than a year down 4.5 percent. That year-on-year decline for the three months to Sept. 30 was only a marginal improvement from the 4.7 percent slump in the second quarter that Clarke had described as the company's "nadir".

Though Asda's sales are falling, it has not reported profit declines and asset write-offs suffered by all its listed British rivals, who have also sold assets.

Parent Wal-Mart did warn on profit last month, blaming higher spending on wages, e-commerce and price cuts, but it reported stronger than expected quarterly earnings on Tuesday.

Tesco sales fell 2.5 percent and Morrisons by 1.7 percent, the Kantar data showed, in stark contrast to Aldi and Lidl, where sales soared by 16.5 percent and 19 percent respectively.

Sainsbury's, which has shown the most resilience to the discounters, lifted sales by 1.5 percent over the 12 weeks and its market share by 0.2 percentage points to 16.6 percent, regaining its status from Asda as Britain's No.2 grocer and sending its shares up 1.8 percent.

Kantar Worldpanel said sales growth in the overall UK grocery market was 0.5 percent, held back by a 1.7 percent fall in prices.

Market share (percent) and sales growth (percent) 12 wks to 12 wks to pct change Nov 8, 2015 Nov 9, 2014 in sales Tesco 27.9 28.7 -2.5 Asda 16.4 17.1 -3.5 Sainsbury 16.6 16.4 1.5 Morrison 10.8 11.1 -1.7 Co-operative 6.3 6.2 1.5 Waitrose 5.2 5.1 2.7 Aldi 5.6 4.8 16.5 Lidl 4.4 3.7 19.0 Iceland 1.9 2.0 -0.6 ($1 = 0.6574 pounds) (Additional reporting by Emma Thomasson,; Editing by Keith Weir and David Goodman)