UPDATE 1-Brazil lending growth slows in July; defaults steady
* Growth in bank lending slows to 0.6 pct in July
* Default ratio remains steady at 5.2 pct in July
BRASILIA Aug 29 (Reuters) - Growth in Brazil's bank lending slowed in July while credit defaults stabilized, central bank data showed on Thursday, reflecting prudence among lenders and borrowers as the country's economic recovery stumbles.
Banks disbursed 0.6 percent more loans in July, slowing from 1.8 percent growth of their loan books in June, the central bank said.
Loans in arrears for 90 days or more, the industry's benchmark gauge for credit delinquencies, were unchanged from June at 5.2 percent of outstanding loans, the report added.
Private-sector lenders, stung by two years of record defaults and declining borrowing costs, began to scale down loan disbursements in riskier segments such as auto and overdraft credit. In contrast, state-run banks - following President Dilma Rousseff's instructions - have stepped up access to credit and cut lending rates to help kick-start Brazil's ailing economy.
Some analysts have pointed at growing risks stemming from the rapid pace of lending by state-owned Banco do Brasil SA and Caixa Econômica Federal.
The International Monetary Fund on Wednesday warned that Brazilian household credit and mortgage loan levels remain risky and warrant vigilance.
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