UPDATE 1-S.Africa's cbank cuts rates on growth worries

* Cbank cuts interest rates by 50 basis points

* Economy likely contracted in Q2

* Domestic economic conditions "very much subdued"

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PRETORIA, Aug 13 (Reuters) - South Africa's central bank surprised markets with a 50 basis point cut in the repo rate to 7.0 percent on Thursday on worries about a weak economy and signs price pressures are easing.

The latest rate decision brings the bank's lending rate to a four-year low and total cuts since December to 5 percentage points, unwinding rate hikes made between June 2006 and June 2008.

The decision will go some way to placate trade unions, that had been demanding a big rate cut to kickstart growth and save jobs, and that called off a strike at power utility Eskom after reaching a deal of pay.

The central bank in June paused a monetary loosening cycle it started in December, citing sticky inflation and most analysts had suggested it would wait for evidence inflation was cooling before cutting again.

However, inflation slowed more than expected in June and recent data showed consumer spending and factory and mining output continue to fall.

The economy is seen contracting again in the second quarter, after a 25 year record decline of 6.4 percent in the first three months of the year.

Central Bank Governor Tito Mboweni warned the economy appeared to be lagging a global recovery.

"The monetary policy committee is of the view that notwithstanding upside cost pressures, the adverse economic conditions appear to tilt the balance of risks to the inflation outlook towards the downside over the medium term," he said.

Government bonds rallied after the decision and the rand weakened, with most investors expecting no change in the repo.

Mboweni said while wage increases and electricity prices still posed a risk to the inflation outlook, the economy was remained constrained by weak global and domestic demand.

"Domestic economic conditions remain very much subdued amid indications that the economy contracted again in the second quarter of 2009," he said.

The central bank's targeted headline consumer inflation slowed to 6.9 percent year-on-year in June and is seen braking further as food prices ease.

Only three of the 26 economist polled by Reuters last week saw the Reserve Bank cutting the repo rate by 50 basis points, with 23 forecasting rates would be left unchanged. (Reporting by Stella Mapenzauswa; Writing by Phumza Macanda)