(Adds details on credit growth, interest rates)
BRASILIA, July 30 (Reuters) - Growth in Brazil's bank lending slowed in June as interest rates continued to rise, the central bank said on Thursday.
Outstanding loans rose 0.6 percent in June from May, lagging the increase of 0.7 percent in the prior month. Lending rose 9.8 percent in the past 12 months, the slowest pace of expansion for credit since at least 2011.
The average interest rate for loans not previously earmarked for housing, agricultural or other sectors - the most widely followed gauge of credit in Brazil - climbed to 43.5 percent in June, the highest since the central bank began keeping records in 2011.
Credit expansion in Brazil has slowed as the central bank raised its benchmark rate to a nine-year high of 14.25 percent since October to curb inflation. State-run banks, which led loan growth in recent years, have also limited disbursements this year as Standard & Poor's and others threatened to cut Brazil's credit rating due to a spike in public debt.
Loans in arrears for 90 days or more, the benchmark gauge for delinquencies in the nation's banking system, remained unchanged from May at 4.7 percent of outstanding loans, according to central bank data.
Tighter lending has not prevented Brazil's largest banks from posting strong second-quarter results. Banco Bradesco SA , Brazil's second-largest private-sector bank, beat profit estimates on Thursday after fee income came in stronger than expected and loan-loss provisions peaked despite an uptick in defaults. (Reporting by Marcela Ayres; Writing by Silvio Cascione; Editing by Chizu Nomiyama and Lisa Von Ahn)