LONDON (Reuters) - British single price discount retailer Poundland (>> Poundland Group PLC) cautioned on Thursday that it expects first-half trading to be subdued after sales growth slowed for a fourth quarter in a row.

Poundland Chief Executive Jim McCarthy dismissed the suggestion the tide was turning against discounters, saying the latest growth slowdown in the first quarter of its financial year was partly due to the weak euro.

Shares in Poundland, which has 588 stores in Britain and Ireland, where it trades as Dealz, and is running a trial in Spain, fell more than 6 percent before recovering to trade 2 percent lower.

Stripping out the impact of currency changes, sales for the 11 weeks to June 14 grew 4.1 percent, down from growth of 7.1 percent in the fourth quarter of Poundland's 2014-15 year and growth of 10.2 percent in its third quarter. Sales growth last accelerated in the first quarter a year ago.

Asked if the party was over for the shop where items cost a pound ($1.6), McCarthy said: "I don't believe so at all."

He said that besides the impact of the weak euro, which Poundland is exposed to in Ireland and Spain, the slowdown highlighted an "exceptional" first half in 2014-15 when sales grew 15 percent thanks to a late Easter, fewer competitor openings, warm weather and the loom bands craze.

He said that meant comparative figures for the first half this year were very tough: "We are really where we expected to be for this year."

SLOWING DISCOUNTER GROWTH

With recession-era shopping habits entrenched, discount retailers, in general merchandise and food, are taking sales from Britain's "big four" supermarkets: Tesco (>> Tesco PLC), Asda (>> Wal-Mart Stores, Inc.), Sainsbury's (>> J Sainsbury plc) and Morrisons (>> WM Morrison Supermarkets PLC).

But discount grocers Aldi and Lidl's sales growth has slowed this year and there are signs a fight back from the big four focussed on price cuts and better service has started to stem the flow.

With official data published on Wednesday showing British workers' pay grew at its fastest rate in nearly four years in the three months to April, the appeal of discounters for some consumers could be dampened.

However, McCarthy said the outlook for the second half was better, reflecting softer comparable sales figures, the opening of at least 40 new stores on a net bases, and the benefit of stores opened last year.

He expects Poundland to benefit from Britain's improving economy. Historic results show Poundland has performed well in austere times but done even better in times of economic growth, with nearly a quarter of its customers now drawn from the more affluent "AB" demographic.

McCarthy also said if the Spanish trial proved a success the company could open up to 400 Dealz stores there over time.

Poundland made an underlying pretax profit of 43.7 million pounds ($69.1 million) in the year to March 29, up 19 percent and in line with analysts' forecasts.

Analysts at Credit Suisse said Poundland's shares looked cheap for a business it forecasts will deliver 16.1 percent average earnings growth over the next four years and still has the potential of a transformational acquisitions.

In February, Poundland said it had agreed to buy smaller rival 99p Stores for 55 million pounds. However, the deal is subject to a investigation by Britain's competition watchdog, which is due to report in October.

(Reporting by James Davey; editing by Kate Holton and David Clarke)

By James Davey