April 20, 2017 / 4:43 PM / in 9 months

UPDATE 1-South Africa's rand extends gains on weak dollar, stocks down

* •Rand strengthens against weak greenback

* •Gold shares weak

* •Rand hedge shares under pressure as stocks fall (Adds closing prices, detail, analyst comment)

JOHANNESBURG, April 20 (Reuters) - South Africa’s rand extended gains against the dollar on Thursday and government bonds firmed, helped by slowing inflation and the government’s rejection of nationalisation of mines and banks.

Stocks were little changed, as rand hedges and gold shares fell.

At 1500 GMT, the rand had gained 0.79 percent to 13.1725 per dollar, its firmest since March 31, compared to a close of 13.2775 overnight in New York.

In fixed income, the yield for the benchmark government bond due in 2026 fell 12 basis points to 8.670 percent.

“The investment community’s view is that inflation is falling sharper than what the Reserve Bank currently anticipates and the country’s real rate story later this year is going to look a lot more compelling than what it does at the moment, therefore the support for government bonds remains,” said BNP Paribas Cadiz Securities Jeffrey Schultz.

Statistics South Africa’s data showed on Wednesday consumer inflation eased in March and Finance Minster Malusi Gigaba dismissed calls from one of his own advisers for the nationalisation of banks and mines.

On the bourse, the benchmark Top-40 index closed 0.08 percent down at 45,735 points, while the broader All-share index lost 0.09 percent to 52,496 points.

As the rand strengthened, investors sold off shares in local companies that earn the bulk of their revenues in hard currency, known as rand hedge shares, dragging the index lower.

“Rand hedge shares are a bit lower, it’s the combination of the slightly lower gold price and the rand strength,” said Cratos Capital equities trader Greg Davies.

BHP Billiton declined 0.36 percent to 203.77 rand, Richemont SA fell 0.45 percent to 104.44 rand, while Mediclinic International dropped 0.77 percent to 122.97 rand.

Gold shares also weakened as the bullion price came under pressure, with markets awaiting the outcome of the looming French presidential election.

Harmony Gold was down by 5.02 percent to 31.42 rand, while Sibanye Gold dropped 4.29 percent to 29.86 rand. (Reporting by Olwethu Boso; Editing by Catherine Evans)

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