UPDATE 1-Sainsbury's says Brexit doesn't change rationale of Home Retail deal

* Sainsbury's publishes prospectus for Home Retail deal

* Hopes to complete deal in September

* CEO says danger UK talking itself into recession (Adds detail, CEO, CFO comments)

By James Davey

LONDON, July 5 (Reuters) - Sainsbury's boss said heremained convinced of the rationale for the supermarket'sproposed purchase of Argos-owner Home Retail despiteincreased economic uncertainty after Britain's UK's vote to quitthe EU.

Chief Executive Mike Coupe also flagged a risk that talk ofa recession after the vote to leave the 28-member European Unioncould prove self-fulfilling.

"There is a danger that we'll talk ourselves into it," hetold reporters on Tuesday after Sainsbury's published a 188-pageprospectus for the 1.4 billion pounds ($1.8 billion) Home Retailacquisition.

"Clearly the economic conditions have changed (postreferendum) and we have to recognise that in the documentation,"he said.

Some analysts have said that by becoming Britain's biggestnon-food retailer Sainsbury's will be more exposed todiscretionary consumer spending which could be dented by thecurrent economic and political uncertainty.

But Coupe warned against paying too much attention toinitial post-Brexit surveys which have indicated a dip inconsumer confidence.

"To predict the future off 10 days' worth of data I think isimpossible," he said.

Sainsbury's hopes to complete the Home Retail deal inSeptember. However, it is currently being considered by thecompetition regulator, which said in May it would decide by July25 whether to launch a full investigation.

"We remain absolutely convinced by the strategic rationaleof the deal and we think it will strengthen our business," saidCoupe.

"We believe that we can still deliver against the synergiesand the execution that we've outlined in the document,regardless of what economic conditions prevail."

The cash and shares deal was agreed in April and at the timewas worth about 1.4 billion pounds. However, Sainsbury's shareshave fallen 19 percent over the last three months, reducing thedeal's value.

The prospectus lays out Sainsbury's plans to open more Argosconcessions and more 'click & collect' sites, creating a net1,000 or more retail roles. However, it to reduce corporate andsupport roles where there is duplication.

The prospectus cautioned about the potential post-Brexitrisks to the U.K. economy and Sainsbury's markets.

Finance chief John Rogers said this was standard practice.

"It's sensible to include a risk that captures thevolatility of the economic environment... We've called Brexitout specifically because that's something that's very current inthe economic backdrop," he said.

Rogers said it was too early to say how the pound'sdepreciation against the U.S. dollar would affect the mergedbusiness but noted that Argos is hedged forward for a year,giving it protection.($1 = 0.7666 pounds) (Editing by Paul Sandle/Ruth Pitchford)