UPDATE 1-Kenyan shares hit 12-month high

* EABL, Safaricom head higher at bourse
* Shilling seen weaker on possible rate cut
* Traded bond volumes tumble

(Recasts with shares)
By Duncan Miriri and Kevin Mwanza
NAIROBI, July 3 (Reuters) - Kenyan shares hit a 12-month
high on Tuesday, propelled by gains in blue chip firms, while
the shilling finished the day unchanged as the market awaited a
key rate decision later in the week.
The benchmark NSE-20 share index added 0.7 percent
to close at 3790.07 points, a level last seen in early July
2011. The index has gained 18.2 percent this year to date.
East African Breweries, which is controlled by
Diageo Plc rose 2.6 percent to close at 236 shillings a
share, buoyed by expectations of improved profit for its
financial year ended last month, thanks to cash from sale of its
shares in Tanzania Breweries (TBL).
"They had a transaction in Tanzania during the period, sale
of its shares in Tanzania Breweries Limited. People are
expecting there will be some cash left over from that," said Eva
Njuguna, a trader at Sterling Investment Bank.
EABL sold its stake in the SABMiller-owned TBL after
it terminated its partnership with SABMiller and bought a
controlling stake in Serengeti Breweries, to go it alone in the
fast-growing Tanzania market.
Telecoms operator Safaricom jumped more than 1
percent to close at 3.65 shillings a share as it bounced from
months of languishing at the 3.30 shillings level, Njuguna said.
"It will consolidate at around 3.50 shillings or 3.60
shillings," Njuguna said.
In the currency market, at the close of the market,
commercial banks quoted the shilling at 84.00/20 per dollar, the
same as Monday's closing level, amid low volumes.
The currency gleaned support from the central bank's
liquidity mop up activity and reduced demand for dollars from
importers, as the market set its sights on a meeting of the
central bank's rate setting committee on July 5.
Traders said any cut in the central bank rate (CBR) could
weigh on the shilling as lower rates make it cheaper for banks
to fund long dollar positions.
Policymakers have maintained a hawkish stance since the last
quarter of 2011, holding the CBR at 18 percent from December, to
curb double-digit inflation and weakness in the shilling.
But recent economic data could persuade them to change their
stance, in order to support the economy, traders said.
"Lower inflation last month and slower economic growth in
the first quarter could push them to cut. That may weigh on the
shilling," said a trader at a commercial bank.
Inflation slowed for the seventh straight month to 10.05
percent in June from 12.22 percent in May, while economic growth
slowed to 3.5 percent in the first quarter of 2012 from 5.1
percent a year earlier.
During Tuesday's session, the central bank mopped up 8
billion shillings ($95.2 million) via repurchase agreements
(repos), having received bids worth 12.7 billion shillings for
its 8 billion shilling offered in seven-day, 14-day, 21-day and
28-day repos.
In the bond market, volumes tumbled with some 350 million
shillings worth of bonds being traded against 1.2 billion
shillings on Monday.
...........................Shilling spot rates
.....................Shilling forward rates
.......................Cross rates
..................................Local contributors
.......................Central Bank of Kenya Index
.....................Kenyan Bonds contributor pages
...............Treasury bill yields
..................Central bank open market operations
.........................Horizontal repo transactions
, ................Daily interbank lending rate
.............................Kenya Bond pricing
..................Real time Africa economic data
<ECI & AFR> ...........................African economic news
.................................NSE-20 Share Index
.................................NSE All Share Index
...........................FT NSE Kenya 15 Index
.......................... FT NSE Kenya 25 Index
SPEED GUIDES:

(Editing by Richard Lough/Jeremy Gaunt)