Share prices recovered and ended in positive territory, lifted by an upturn in US stocks, and helped the rand to recover. But some resources stocks such as gold miner Harmony Gold took a beating.
Bonds closed with the yield on the four-year note at a life-time low of 6.63 percent on the Johannesburg Stock Exchange, mainly driven by offshore buyers attracted by the higher yield, traders said.
"The bond market is closing exceptionally strong. We've seen buying of our bonds across the curve, the forward rate agreements are also suggesting the possibility of a rate cut going forward now as well," said Richard Farber, a bond trader at World Wide Capital Securities, based in Johannesburg.
Forward rate agreements are instruments used to gauge expectations of future interest rates and traders are starting to price in a slight chance of a South African rate cut early next year.
STOCKS RECOVER, BOOST RAND
Share prices recovered in tandem with US stocks, but gold miner Harmony Gold plunged 5 percent, its biggest one-day fall in two months, as investors continued to punish the stock after the company posted a 67 percent fall in quarterly profit on Monday.
Its shares were the worst performer on the Johannesburg Top-40 benchmark index.
All three major US indexes, the Dow Jones Industrial average , the Standard & Poor's 500 Index and the Nasdaq Composite Index , turned positive in early trade.
"We've recovered quite nicely on the back of the markets overseas that are recovering a little bit," said Rigardt Maartens, a portfolio manager at PSG Online Securities.
"There's so much negative news coming out of the global economy at this stage so it's difficult to predict when it's going to recover, but we expect a bit of a relief rally."
The JSE Top-40 ended 0.44 percent higher at 26,145.28 and the broader All-share index rose 0.31 percent to 29,378.69.
The general resources index dropped 0.84 percent.
Banks such as Absa Group and Standard Bank clawed back losses and gained 3.05 and 2.81 percent respectively.
The rand came back from the day's lows to trade at 7.18 by 1600 GMT, 0.17 percent off the New York close of 7.1920.
"It's come back a little bit purely as a play on what's been happening to equities. There was a lot of nervousness around this morning with Asia softer and then as Wall Street opened up a little bit firmer it has helped European and regional equities in this part of the world," said Nigel Rendell, senior strategist at RBC.
Copyright Reuters, 2011