UPDATE 2-South African glass bottle maker Consol cans IPO plans

* Company blames challenging market conditions

* JSE All-Share index down 7 pct from Jan highs

* Analysts say government needs to deliver on reforms (Adds analyst, details)

JOHANNESBURG, April 25 (Reuters) - South African glass bottle maker Consol pulled a planned $240 million Johannesburg stock market flotation on Wednesday, citing challenging market conditions.

In what would have been South Africa's biggest initial public offering (IPO) so far this year, Consol hoped to ride investor confidence in new President Cyril Ramaphosa, who has pledged to revive the ailing economy.

Business leaders in Africa's most industrialized economy have expressed their trust in Ramaphosa, leading to stocks hitting a string of record highs earlier in the year.

But the JSE All-share index, the broadest measure of stock market performance, has fallen about 7 percent from its January highs due to setbacks in global markets and profit taking.

Consol, bought for 6.1 billion rand in 2007 by Brait and the private equity arm of Old Mutual and Sanlam , had priced its IPO at between 1.50 rand and 6.50 rand a share to raise as much as 3 billion rand ($241 million).

"The prevailing environment is not conducive to the offer achieving valuation objectives," the company said in a statement. "It would not be in the best interests of the company to proceed with the offer at the current time."

Casparus Treurnicht, research analyst and portfolio manager at Gryphon Asset Management, said the decision showed scale of the task ahead for South Africa's new leadership.

"Ramaphosa can do what he wants but the credibility of South African business in general has already been hurt," he said. "He will first need to fix things at the top before foreigners would be willing to invest at the bottom."

Economists at the South African Chamber of Commerce and Industry said recently the direction of most of business climate indicators was still positive, but the momentum appeared to have slowed as the encouraging words from the country's new leadership needed to be "supplemented by tangible results."

"Foreign investors are still skeptical about South Africa and most did not want to pay to participate in the IPO at that valuation range," an industry source said.

The top-end of the range would have valued the company at roughly 10 billion rand, or about six times its 2017 core earnings of 1.6 billion rand.

Consol, which counts blue-chip companies such as Anheuser-Busch InBev, Diageo and Heineken among its customers, is one of the biggest glass packagers in sub-Saharan Africa. It has plants in South Africa, Kenya and Nigeria, and is also building a factory in Ethiopia.

($1 = 12.4492 rand) (Additional reporting by Nqobile Dludla; Editing by Alexandra Hudson and Mark Potter)