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UPDATE 1-Australia's Woolworths quarterly sales rise 4.2 pct, aided by better weather

weather@ (Adds details on results, background)

May 2 (Reuters) - Australia's biggest supermarket chain Woolworths Group Ltd reported a 4.2 percent rise in third-quarter sales on Thursday, benefiting from lower food deflation and better weather that boosted results at its grocery business.

Total sales from continuing operations rose to A$14.90 billion ($10.46 billion) in the 13 weeks to March 31 from A$14.30 billion a year earlier.

Australian food sales rose 3.6 percent on a comparable store basis, which excludes new store openings.

In its half-year earnings report in February, the company said weather hurt sales in all of its businesses. But it saw an improvement in weather across key trading states and the timing of New Years Eve supported sales in the third quarter.

The company's same-store grocery sales growth of 4.2 percent, adjusted for holidays, beat rival Coles which posted 2.2 percent growth in adjusted comparable sales earlier this week.

Both retailers are seen as barometers of the overall Australian economy, together collecting a majority of grocery dollars spent in the country.

In a bid to further boost profitability, the grocer last month said it would shut about a sixth of its loss-making discount department stores chain, the Big W, over the next three years.

Woolworths' Australian food sales rose 4.1 percent to A$10.02 billion from a year earlier.

($1 = 1.4251 Australian dollars) (Reporting by Niyati Shetty and Rashmi Ashok in Bengaluru; Sonali Paul, Bernard Orr)