July 19, 2018 / 4:00 PM / 3 months ago

UPDATE 1-South Africa's rand retreats after lending rate unchanged, stocks steady

* Rand weakens after cenback holds lending rate

* Dischem gains on bourse, flags much higher earnings (Adds details, analyst quotes)

JOHANNESBURG, July 19 (Reuters) - South Africa’s rand weakened on Thursday after the central bank kept lending rates unchanged but warned that risks to inflation were rising and the outlook for economic growth had worsened, extending a selloff from earlier in the session.

At 1545 GMT the rand was 2.25 percent weaker at 13.55/dlr.

“Although this policy decision was widely expected, the downgrade in GDP growth forecast dealt a swift blow to sentiment,” said Lukman Otunuga, an analyst at FXTM.

The Reserve Bank kept its benchmark repo rate unchanged for a second consecutive meeting, warning risks to inflation were materialising while the growth outlook had deteriorated.

At the meeting it cut its 2018 growth forecast to 1.2 percent from 1.7 percent.

Bonds were also weaker, with the yield on the benchmark paper due in 2026 adding 6 basis points to 8.74 percent.

On the bourse, stocks ere steady, ticking up slightly with Johannesburg-listed Steinhoff shares among the biggest advancers.

The Johannesburg Top-40 index closed up 0.06 percent at 50,199 points, while the broader All-Share index rose 0.07 percent to 56,276 points.

Retailer Steinhoff closed up 18.67 percent after it said that about 90 percent of creditors for several subsidiaries supported an agreement to hold off debt claims for three years.

“There is no fresh news driving the markets. The Steinhoff shares are up quite nicely, one would’ve thought it would come up higher as the lock up agreement has come through and they can now focus on their core business,” said Cratos Capital trader Greg Davies.

Among other gainers drugstore chain Dis-Chem Pharmacies rose 7.07 percent to 28.86 rand after it said group sales rose 11 percent in the first four months of the financial year.

Steelmaker ArcelorMittal South Africa leapt 18.5 percent after it said it expects half-year earnings to swing into profit. (Reporting by Mfuneko Toyana and Nomvelo Chalumbira Editing by Ed Stoddard)

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