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LONDON, Mar 29 (Reuters) Shares in British sugar and sweetener group Tate&Lyle Plc dipped on Wednesday due to worries about competition from India for its key sweetener sucralose which overshadowed an encouraging trading update.

Tate makes a fifth of its profits from its zero-calorie sucralose which sells under the brand name Splenda, but a report that Bangalore-based Pharmed Medicare is working on its own sucralose plant sent Tate's shares lower in early trading.

The shares slipped 2.4 per cent to 572 pence by 0810 GMT (1340 IST) to be the FTSE-100's biggest loser as investors worried about the threat to Tate's position as the only producer of the super sweetener sucralose, which is some 600 times sweeter than sugar.

A report in a leading Indian business paper said Pharmed was planning a plant to produce 1,000 tonnes annually and Pharmed group president Sundeep Aurora claimed to have a patent-pending propriety process to make sucralose.

A Tate spokesman said the group has seen this type of speculative story before. ''We are waiting to see if something emerges in concrete terms on actual plant construction''.

Analysts added the shares also came under pressure from a big, as yet unspecified, impairment charge after wideranging EU sugar regime reforms and higher costs at Tate's only sucralose plant in Alabama due to higher ingredient and energy costs.

Tate, which makes branded sugars, sweeteners and industrial starches, said overall trading had been generally encouraging since its last update in late January, as it gave a trading update ahead of the close of its financial year at end-March and annual results on May 25.

Tate warned that reform of the EU sugar regime, under which support prices will be slashed 36 per cent, will see a ''substantial'' impairment charge on some of its related assets, currently valued at 750 million pounds ($1.3 billion).

Details will be given with its annual results.

The group said its European ingredients business was continuing to suffer from lower sweetener prices due to a glut of competing sugar, but its Americas region performed strongly due to both higher selling prices and volume growth.

Tate's European sugar operations continued to see a decline in earnings due to higher energy costs and lower selling prices caused by excess supply and impending cuts in support prices.

Tate's shares have been buoyed in recent months by strong North American trading and good demand for sucralose, but they ran out of steam by January amid worries of sucralose competition and the EU sugar reforms.

REUTERS SD HT1937