London's FTSE 100 finishes third quarter at record high

By Johann M Cherian

Sept 30 (Reuters) - Britain's internationally-exposed FTSE 100 closed at a record high on Tuesday and logged its biggest quarterly performance since October 2022, helped by a weaker pound that increases earnings for companies that are reliant on export revenues.

The FTSE 100 .FTSE added 0.5% to end at 9,350.43, while the domestically-focused FTSE 250 .FTMC added 0.7%.

Defence stocks .FTNMX502010 gave the biggest boost to the main index on Tuesday, with Melrose MRON.L and Rolls-Royce RR.L gaining more than 2% each after brokerage UBS lifted its price targets on the stocks.

"We've obviously had a marginally weaker pound over the last sort of couple of weeks, which will have been helping," said Michael Brown, a senior research strategist at Pepperstone.

"Plus, the fact is that for a number of years now the FTSE 100 on various valuation measures compared to peers across the Atlantic still trades very, very cheap, which is probably attracting some bargain hunters."

Still, much of the third quarter has been dominated by the precarious fiscal situation in the UK that had sent gilts and the pound GBP= lower, and domestically-focused midcap stocks have logged smaller quarterly gains compared to the FTSE 100. GBP/ GB/

Policymakers are also trying to determine the monetary policy outlook against the backdrop of a stalling economy and persistent inflation.

Businesses are bracing for potential tax hikes in the British government's November budget as it seeks ways to plug a hole in the public finances.

The likelihood that gambling firms could be hit weighed on stocks such as Evoke EVOK.L, which lost 2.6%.

Meanwhile, ASOS ASOS.L warned that annual revenue would fall short of market expectations due to weak consumer demand, sending shares of the British fashion retailer down 4.7%.

BT Group BT.L lost 1.1% after brokerage New Street Research downgraded the telecom stock to "neutral" from "buy'.

Global sentiment was also gloomy, with Washington fast approaching a potential government shutdown.