July 17, 2018 / 4:11 PM / 10 months ago

UPDATE 2-South Africa's rand retreats as bears await rate decision; stocks up

* Rand retreats ahead of data, rate decision

* Bourse breaks five-day losing streak (Updates with closing prices)

JOHANNESBURG, July 17 (Reuters) - South Africa’s rand weakened on Tuesday, giving way to a recovering dollar and the return of bearish positioning ahead of consumer inflation and retail data that precede a central bank decision on lending rates.

At 1545 GMT the rand was 0.11 percent weaker at 13.2275 per dollar, with traders eyeing upcoming events for the next move.

An emerging markets sell-off began on Monday after oil prices tumbled over 4 percent, adding to concerns over China’s second-quarter economic growth and lingering worries about Turkey’s policy path since Tayyip Erdogan’s re-election.

“There is currently some negative sentiment towards Turkey and its president Erdogan; traders may use the rand as a proxy for the Turkish lira, which could lead to rand weakness,” traders at Investec said.

Headline inflation is set to have jumped in June as a plunge to a 7-year low in March gave way to increases in value-added tax and petrol prices.

All 25 economists polled by Reuters last week expect South Africa’s Reserve Bank to hold rates at 6.5 percent on Thursday..

Markets will also be looking at how hawkish a tone Governor Lesetja Kganyago strikes.

In fixed income, bonds were firmer with the yield on the benchmark issue due in 2026 down 4 basis points to 8.67 percent.

On the bourse, shares closed higher in cautious trade, snapping a five-day losing streak.

The Johannesburg Top-40 index closed up 1.33 percent at 49,995 points, while the broader All-Share index rose 1.21 percent to 56,113 points.

“The JSE closed sharply higher in thin trade ahead of (the) risk events of local inflation data due tomorrow and the Reserve Bank rate announcement on Thursday,” Avior Capital Markets said in a note.

Among the biggest gainers, South African bourse operator JSE Ltd advanced 4.48 percent after it said it expects half-year headline earnings per share to rise as much as 40 percent compared with the prior reporting period.

Platinum producer Anglo American Platinum also rose 1.88 percent to 289.52 rand after saying it has invested $100 million in a new venture capital fund with an aim of stimulating industrial demand for platinum group metals. (Reporting by Mfuneko Toyana and Nomvelo Chalumbira Editing by Ed Stoddard and Jan Harvey)

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