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Goldman's bond trading slumps 40 pct

July 18 (Reuters) - Goldman Sachs Group Inc posted a 17 percent decline in trading revenue in the second quarter, mirroring a broader weakness in bond trading activity that has plagued big U.S. banks.

Goldman, the fifth largest U.S. bank by assets, is typically more reliant on bond trading revenue than its peers.

Revenue from trading fixed income, commodities and currencies fell 40 percent to $1.16 billion.

The Wall Street bank's net income applicable to common shareholders was nearly flat at $1.63 billion in the second quarter ended June 30.

Earnings per share, however, rose to $3.95 from $3.72 as number of shares outstanding decreased nearly 6 percent.

Analysts had expected earnings of $3.39 per share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the figures were comparable.

Total revenue, including net interest income, fell 0.6 percent to $7.89 billion.

Goldman's rival Morgan Stanley is expected to report earnings on Wednesday.

(Reporting by Sweta Singh in Bengaluru and Olivia Oran in New York; Editing by Sriraj Kalluvila)