* FTSE 100 down 0.3 percent
* Budget awaited at 1230 GMT, BoE minutes at 0930 GMT
* Supermarkets weaker after Sainsbury results
* Banks weighed by worries on euro zone debt
By Simon Falush
LONDON, March 23 (Reuters) - Supermarkets pulled Britain's top share index lower on Wednesday after Sainsbury missed sales forecasts, underlining the tough economic backdrop against which Britain's finance minster will later reveal the national budget.
Strife across the Arab world, worries about the nuclear crisis in Japan and Portugal's debt crisis also kept investors on edge.
By 0908 GMT, the FTSE 100 was down 14.15 points, or 0.3 percent, at 5,748.56, having closed down 0.4 percent on Tuesday. The index is down around 4 percent in March.
Sainsbury slipped 5.3 percent as its fourth-quarter sales failed to meet expectations, adding to signs of a slowdown in consumer spending growth as inflation climbs and government spending cuts bite.
Gloom on the outlook for grocery spending pushed peers Tesco and Morrison 2.4 and 1.7 percent lower, respectively.
Marks & Spencer, however, added 1 percent, as prospects for its clothing business were helped by fashion retailer Inditex posting a 32 percent jump in annual net profit. Clothes retailer Next also gained 0.6 percent.
The high price of oil, which has spiked on turmoil across the Middle East and North Africa, combined with the nuclear crisis in Japan, has stoked concerns that global growth will take a knock.
"There's concern on the oil price with what's happening in Libya, and there's worry about what it will do to economic activity," said Keith Wade, chief economist and strategist at Schroders, which has 197 billion pounds ($322.5 billion) under management.
However, he said that unless energy prices rose much beyond current levels equities still presented good value.
"We are still positive on equities in our asset allocation as prospective P/E ratios and book values are below average."
Banks were a drag on the index ahead of a crucial vote in the Portuguese parliament that could bring down the government, a reminder that the euro zone's debt crisis is far from resolved.
Cairn Energy was the top gainer, up 2.5 percent as brokers raised target prices for the stock, adding to strong gains the previous session after robust results.
The UK budget statement, to be delivered at 1230 GMT, will see Britain's coalition government seeking to bolster a faltering economy without compromising its austerity programme.
For a preview of the UK Budget, double click on
Ahead of the budget, minutes from the Bank of England Monetary Policy Committee's February meeting will be published at 0930 GMT, with investors keen to see whether the number of committee members voting for a rate rise rose in the face of the spiralling inflation data.
Ex-dividend factors will knock 2.2 points off the FTSE 100 index on Wednesday, with Aviva, InterContinental Hotels, and Schroders all trading without their dividend attractions.
Technical analysts said charts pointed to further likely weakness for the FTSE 100.
"Given the main range of 5,505.00 to 5,813.81, the current chart pattern suggests the start of a correction to 5,662.00 to 5,625.00," said James A. Hyerczyk, analyst at Autochartist.
"Holding this level will be a strong indication that the final bottom was reached last week at 5,505.00. A failure to hold this retracement zone will mean that this week's rally was merely short-covering and that lower prices are to follow," Hyerczyk said. (Editing by Will Waterman) ($1=.6108 Pound)