The visitors dominated the first half but were undone against the run of play in the 62nd minute when defender Denayer headed in Memphis Depay’s corner at the near post.
Lyon defended in numbers after having Rafael da Silva sent off in the 70th minute for a two-footed lunge on Yann M’Vila and comfortably thwarted St Etienne’s desperate raids.
The home team’s goalkeeper Anthony Lopes produced two superb saves in the first half to keep out headers by Lois Diony and Matthieu Debuchy, as the visitors looked more adventurous.
Maxwel Cornet fired over the bar shortly after the break and Depay went close with a low shot before Denayer broke the deadlock to delight the home fans in driving rain.
St Etienne struggled to break through in the closing stages and although down to 10 men, Lyon could have doubled their lead in the dying minutes when Cornet could not get enough direction on Houssem Aouar’s cut-back across the face of goal.
Lyon are on 27 points with fifth-placed St Etienne on 23 after 14 games each.
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