JOHANNESBURG: South African markets fell more than 1.5 percent on Thursday as investors dumped high risk assets in favour of the dollar on worries that the global economic recovery may be stalling.
The rand registered its biggest daily fall to the dollar since May 23 and was in the bottom three of the worst performers among emerging currencies tracked by Reuters.
The resource-heavy local bourse was hammered after a bleak economic outlook from the US Federal Reserve weighed on bullion prices.
The local index of gold miners dropped more than 3 percent, closing at its lowest level in almost a year. The index is down more than 14 percent this year.
Harmony Gold, South Africa's third-largest gold miner, fell nearly 6 percent to 83.29 rand, its biggest one-day decline in more than two years.
"We came down after last night's statements by Ben Bernanke, which also had an effect on China's markets," a trader at Johannesburg-based BOE said.
"The main losers of the day were the resource-based stocks, hit by the sharp decline in the oil price and general growth concerns (which) led to a lot of downgrading in growth forecasts."
The JSE Top-40 index of blue chips declined by 1.6 percent to 27,026.92, while the All-Share index shed 1.5 percent to 30,326.54.
Spot gold sank as low as $1,514.60 an ounce from $1,548.76 at Wednesday's close, while ICE Brent crude oil for August delivery is down $5.6 to $107.78 a barrel.
AngloGold Ashanti dropped more than 3 percent, the biggest intra-day fall in three months. Gold Fields , the world's fourth-largest miner of the precious metal was down by nearly 3 percent to 95.68 rand.
Following the bleak US outlook from the Fed, European Central Bank President Jean-Claude Trichet said on Thursday the warning lights were flashing red on the euro zone's debt crisis.
"This all affected sentiment and revived fears of a global market slowdown. The sharp fall in the oil price today also had an effect," the BOE trader said.
The negative sentiment also saw the rand hit one week lows of 6.8875, and bonds also mirrored those losses.
Dealers said the Reserve Bank was also in the market in the past two sessions after the rand hit two-week highs at 6.70 on Wednesday.
By 1754 GMT, it was trading at 6.86 to the dollar, 1.3 percent weaker than Wednesday's New York close of 6.7750.
"The current risk aversion and general market sentiment has not been kind to the rand," said IFR Markets, a Thomson Reuters news and analysis service.
Stop losses were triggered when the rand pierced support at 6.85, which is also its 100-day moving average. The next support level for the rand is 6.88, and is likely to attract exporters selling dollars if hit in the next few days.
Yields rose across the curve, with the 2015 bond yield up two basis points to 7.49 percent and that on the 2026 note up 5.5 basis points to 8.615 percent.
Copyright Reuters, 2011
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