MILAN/LONDON (Reuters) - Shares in European food retailers suddenly fell on Friday after news that Amazon.com (>> Amazon.com) would buy Whole Foods Market (>> Whole Foods Market, Inc.) raised fears of heightened competition for the sector.

Europe's retail index <.SXRP> fell 1 percent, reversing earlier gains after Amazon said it would buy Whole Foods in a deal valued at about $13.7 billion, including debt.

AFS Group analyst Jauke de Jong said the deal showed Amazon's determination to get into the grocery business in combination with Amazon Prime.

"Amazon entering the market would mean an increase in competition from a strong player," he said.

Dutch supermarket chain Ahold Delhaize (>> Ahold Delhaize), which has a strong presence on the east coast of the U.S., fell up to 7.5 percent, while elsewhere in the sector shares in French supermarkets Casino (>> Casino Guichard-Perrachon), Carrefour (>> Carrefour) fell.

British retailers Tesco (>> Tesco), Sainsbury (>> J Sainsbury), and Ocado (>> Ocado Group PLC) were also sharply hit.

(Reporting by Danilo Masoni and Helen Reid)