Tobacco stocks and Sainsbury weigh on Britain's FTSE
* FTSE 100 index down 0.4 percent
* Imperial, BATS fall after report of China smoking ban
* Sainsbury slips after cautioning on outlook
LONDON, Jan 8 (Reuters) - Britain top share index fell on Wednesday, led down by defensive stocks after regulatory concerns knocked back tobacco firms and J Sainsbury turned negative after cautioning over its outlook.
Imperial Tobacco and British American Tobacco fell 2.4 percent and 1 percent respectively, with traders citing a report Hong Kong's South China Morning Post newspaper that health authorities in China aim to roll out a nationwide smoking ban in public places by the end of this year.
The falls trimmed over 4 points off the FTSE 100, which was down 26.66 points, or 0.4 percent, at 6,728.79 by 1122 GMT.
"With China, there's a lot of concern over smog and air pollution. The doors have been flung open with regards to reform, and with that will come a change in standards with regards to healthcare," Alastair McCaig, analyst at IG, said.
"It will increasingly become the focus, and that's a battle that tobacco are going to have to face in the coming years."
Defensive stocks outperform in times of economic uncertainty and the tobacco sector gained strongly in the first half of 2013, climbing 15 percent. However, since then, it has given away its gains, as investors rotate into stocks more sensitive to growing economic optimism.
Consumer staples, a broad sector including tobacco stocks and food retailers, took 10 points off the index in total, with J Sainsbury also weighing on the market. The grocer fell 2 percent after its chief financial officer lowered the company's growth forecast.
The drop came despite a strong start after reporting that sales at its stores open over a year rose 0.2 percent in the 14 weeks to Jan. 4, beating forecasts which ranged from flat to down 1 percent.
Barclays nevertheless reiterated an "overweight" rating on the stock following the call, saying that it believed the firm was upfront about challenges because it was prepared for them.
"We think that it was rather revealing that the CFO commented on the call that the tough 4Q (comparatives) were very visible and that it was reasonable to conclude Sainsbury would have planned ahead... We think that the negative share price reaction this morning is somewhat surprising," analysts at Barclays said in a note.
"It is of course true that the cut in (like-for-like) sales guidance is unwelcome, but it is a much lower cut than the market could reasonably have expected given where consensus 3Q LFL estimates stood."
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