March 24, 2017 / 3:56 PM / 4 months ago

UPDATE 1-South Africa's rand retreats as rally loses steam, stocks slide

3 Min Read

* All eyes in currency markets on U.S. politics

* Life Healthcare, mining firms down

* Government bonds also weakened (Updates with closing prices)

JOHANNESBURG, March 24 (Reuters) - South Africa's rand retreated against the dollar on Friday, giving up gains driven by improving appetite for emerging markets assets and a set of local data showing momentum was returning to the domestic economy.

Stocks were weaker for a third session as Life Healthcare and diversified mining firms weighed.

At 1500 GMT, the rand traded at 12.4800 per dollar, 0.24 percent weaker from its New York close on Thursday. The unit is trading at its strongest level since July 2015, according to Thomson Reuters data.

"Normally the market is cautious about keeping on aggressive positions over a weekend and so Fridays often see a counter-trend reversal," RMB Global Markets analyst John Cairns wrote in a note.

All eyes in financial markets were fixed on political events in the U.S. where Republican efforts to pass a replacement for Obamacare on Friday, the result of the vote and U.S. President Donald Trump's response seen as crucial to his promise to deliver a "phenomenal" tax reform.

Market focus is shifting to the interest rates decision by the South African Reserve Bank next week, with a Reuters poll predicting its March 30 policy announcement will keep benchmark lending rates on hold.

Government bonds also weakened, and the yield for the benchmark instrument due in 2026 rose 4.5 basis points to 8.365 percent.

On the stock market, the benchmark Top-40 index was down 0.4 percent at 44,662 points, while the broader All-share index was 0.4 percent weaker at 51,816.

Life Healthcare was the biggest decliner among the blue-chips, extending losses it suffered on Thursday after announcing a sharper than expected discount on its 9 billion rand ($720 million) rights offer.

Shares in Life Healthcare were down 3.2 percent at 32.35 rand.

Diversified mining firms Anglo American and BHP Billiton also weighed on the bourse as the copper price was set for a weaker close this week.

Anglo was down 1.1 percent at 196.37 rand and BHP Billiton shed 1.1 percent to 195.50 rand. ($1 = 12.4752 rand) (Reporting by Olivia Kumwenda-Mtambo and TJ Strydom; Editing by Julia Glover)

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