Updates to reflect afternoon trade

JOHANNESBURG, June 22 (Reuters) - The South African rand edged up on Monday as progress in U.S.–Iran peace talks supported broader risk sentiment.

• At 1403 GMT, the rand ZAR=D3 traded at 16.40 against the dollar, 0.2% stronger than its previous close.

• U.S. and Iranian officials made "encouraging progress" at their first round of talks in Switzerland that ended early on Monday, mediators said, though tensions over Lebanon and the Strait of Hormuz remained.

• The greenback =USD was steady against a basket of currencies, while Brent crude oil prices dropped over 2%.

• Like other risk-sensitive currencies, the rand has been at the mercy of global market sentiment, particularly since the start of U.S.-Israeli attacks on Iran on February 28.

• Domestically, investors will look to the composite leading business cycle indicator ZALEAD=ECI on Tuesday and producer inflation ZAPPIY=ECI data on Thursday for clues on the health of the economy.

• On the Johannesburg Stock Exchange, the Top-40 index .JTOPI closed up 0.2%.

• South Africa's benchmark 2035 government bond ZAR2035= strengthened, as the yield fell 3.5 basis point to 8.28%.