June 13, 2018 / 4:00 PM / in 5 months

UPDATE 1-South African rand recovers after four-day losing streak; stocks inch up

(Updates to reflect afternoon trading)

JOHANNESBURG, June 13 (Reuters) - South Africa’s rand recovered some ground on Wednesday, bouncing back against a weaker dollar despite retail sales data pointing to a sluggish economy at the start of the second quarter.

At 1540 GMT, the rand traded at 13.2300 per dollar, 0.7 percent stronger than its close on Tuesday and snapping a four-day losing streak.

Earlier on Wednesday the rand had wallowed at 13.3975 to the dollar, its weakest since mid-December.

South African assets have been hurt recently by disappointing first-quarter gross domestic product data and an unfavourable external backdrop which has seen global investors pull back from emerging markets.

The U.S. Federal Reserve is widely expected to raise interest rates later on Wednesday, a move that typically pressures currencies like the rand. But the dollar index was weaker before the Fed announcement, benefiting some developing market currencies including the rand and the Russian rouble.

Investors were looking to Wednesday’s retail sales data for signs that the South African economy had gained momentum since President Cyril Ramaphosa’s election as head of state in February. But sales growth of 0.5 percent in April came in below expectations for growth of 4.1 percent.

Still, many analysts are sticking with optimistic predictions for the remainder of the year.

“Although April figures disappointed we still expect household consumption expenditure growth of 2.3 percent in real terms this year,” Investec analysts wrote in a note to clients, attributing the weak April reading partly to an increase in value added tax from April 1.

In fixed income, the yield on the benchmark government bond due in 2026 was down 3 basis points to 8.96 percent, reflecting stronger bond prices.

Stocks ended slightly higher, but retailers performed poorly. The Johannesburg Stock Exchange’s Top-40 index added 0.6 percent to 52,200 points, and the broader All-share index gained 0.4 percent to 58,437 points.

Among the biggest risers, FirstRand gained 1.2 percent and Old Mutual added 1.4 percent, leading a recovery in the financial services sector after a recent selloff driven by worries about the pace of economic growth.

Retailers Truworths and Mr Price were among losers, falling 3 percent and 2 percent, respectively.

Reporting by Alexander Winning and Tiisetso Motsoeneng Editing by James Macharia

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