Brazil's retail sales weaker than expected in April amid high borrowing costs

SAO PAULO, June 16 (Reuters) - Brazil's retail sales volumes contracted more than expected in April, data from statistics agency IBGE showed on Tuesday, with elevated borrowing costs weighing on activity ahead of the central bank's interest rate decision this week.

* Sales dropped 1.5% in April from the previous month. Economists polled by Reuters had expected a 0.6% fall

* Six of eight sectors fell in April, IBGE said, with fuels and lubricants posting the biggest decline

* "Data reinforce the view that higher borrowing costs and tighter credit conditions continue to weigh on discretionary spending," said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics

* On an annual basis, retail sales rose 1.0% in April, falling short of expectations of a 1.95% increase

* Brazil's central bank, which meets on June 16-17, targets inflation at 3%, plus or minus 1.5 percentage points

* In April, policymakers cut the central bank's key interest rate by 25 basis points to 14.50%, while flagging inflation risks from the U.S.-backed war with Iran and leaving the outlook open for further adjustments (Reporting by Isabel Teles; Editing by Paul Simao)