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South Africa's rand gains as risk demand slows

JOHANNESBURG, June 26 (Reuters) - South Africa's rand clung to recent gains early on Wednesday as global risk appetite retreated after the United States central bank played down expectations of aggressive interest-rate cuts.

At 0645 GMT, the rand was up 0.19% at 14.3300 per dollar from an overnight close of 14.3575. Lack of local economic data and a political lull kept the currency in a narrow range.

The early session was mixed for emerging-market currencies, with most Asian currencies slipping back while commodity-backed currencies remained steady.

"Yesterday evening saw speeches from a few Fed officials tempering down the possibility of U.S. rate cuts at the July meeting," said Oliver Alwar said, a senior trader at Standard Bank. "This resulted in EM currencies relinquishing some gains, global equities retreating and the dollar come back to a small degree."

On Tuesday, members of the Federal Reserve's policy committee toned down the outlook for rates, with St. Louis Fed President James Bullard saying a 50-basis-point rate cut "would be overdone."

Investors still expect a cut of at least a quarter point at the bank's July meeting.

Bonds were flat, with the yield on the benchmark bond due in 2026 down 0.5 basis points to 8.165%. (Reporting by Mfuneko Toyana, editing by Larry King)