* Rand at 3-1/2 yr low
* Retailers sold off, mining recovers
By Helen Nyambura-Mwaura
JOHANNESBURG, Oct 8 (Reuters) - South African shares edgedlower on Monday after the rand weakened more than 2percent, hitting retailers reliant on dollar-denominated importssuch as Mr Price , but rewarding exporters producing inthe local currency.
Investors also punished AVI Ltd , a consumer foodsmaker that also sells designer brands such as Kurt Geiger andCarvela shoes, pushing it 7.3 percent lower to 56.45 rand.
The rand tumbled to a 3-1/2 year low on Monday, losing asmuch as 2.4 percent to a low of 8.9950 per dollar, just shy of akey psychological level at 9.
"All the retailers that are importing are getting knockeddown quite aggressively whereas all the rand hedges that areproducing in rand and exporting in dollars are up today," saidRobert Towell, a senior portfolio manager at Consilium Capital.
The Top-40 index shaved off 0.55 percent to32,183.45 while the All-Share lost 0.69 percent to36,337.39.
Clothing and home goods seller Mr Price plummeted 9 percentto 116 rand. Grocers Pick N Pay and Shopritelost over 4 percent to 41.95 and 157.62 rand respectively.
BofA Merrill Lynch on Monday dropped cut its rating on SouthAfrica's consumer firms to neutral from overweight. The sectorhas been popular with foreign investors despite local analysts'protests that it was overvalued.
"We put the long-loved SA consumer theme on neutral," thebrokerage said.
"Throw in the negative South Africa specific strikeheadlines and we find the case for near term outperformance tohave largely disappeared."
Mining firms, which are reeling from a series of wildcatstrikes that started in the platinum sector and spread to othercompanies and beyond the industry, recovered marginally.
Some 75,000 miners have downed tools, pushing precious metalprices higher.
Gold miners gained nearly 2 percent with SouthAfrica's third-largest producer Harmony up 3 percent at69.56 rand.
Impala Platinum added 2.7 percent to 143.82 randand Anglo American Platinum gained over 1 percent to403 rand, despite purging 12,000 wildcat strikers from itspayroll on Friday.
Steelmaker Arcelor Mittal ended trade 1.8 percentstronger at 40.44 rand, minutes before it announced that asupplier, Sishen Iron Ore Company, had declared a force majeurebecause of an illegal strike.
Trade was robust with over 193.5 million shares changingownership. Share prices of 182 companies lost value while thoseof another 101 were stronger.
(Reporting by Helen Nyambura-Mwaura; editing by David Dolan)
Keywords: SAFRICA STOCKS/