** Coles Group COL.AX falls as much as 2.9% to A$22.045, lowest since August 26

** Stock set for steepest intraday pct drop since August 22

** Australia's second-largest grocer posts ~4% jump in Q1 sales revenue

** However, Jefferies says Woolworths may have begun to close gap to Coles from late in Q1, when it took action to invest in value, upweight inventory levels

** YTD, COL gains 17.2%

($1 = A$1.5389)

(Reporting by Shivangi Lahiri in Bengaluru)

((shivangi.lahiri@thomsonreuters.com))