×

S.African markets rebound on euro zone package

JOHANNESBURG, May 10 (Reuters) - South African markets rebounded with global assets on Monday as investors cheered a $1 trillion emergency package to stabilise the euro and euro zone debt woes. Stocks surged to the biggest one-day jump since March last year, erasing a similar fall on Friday. The JSE blue chip Top-40 index jumped 4.58 percent to 24.678,19 points, while the broader All-Share index gained 4.32 percent to 27,661.61 points. "There was panic selling on Friday and you see panic buying again today, because nobody wants to miss out," says Andrew Todd, a trader at Imara SP Reid. "People are panicking either way ... it'll just be interesting to see where we go from here." Diversified miner African Rainbow Minerals (ARM) was up 8.8 percent to 189.32 rand and Impala Platinum gained 7.53 percent to 200 rand. The rand recovered to a one-week high against the dollar on renewed risk appetite, ignoring a lower price for gold, a key South African export. The local currency was trading at 7.4775 to the dollar at 1600 GMT, 2.6 percent stronger than its previous close in New York, for its biggest single session gain in 10 months, after earlier touching 7.4250. "The main driving factor is the encouraging news over the weekend of eurozone agreement of the massive emergency plan to solve the debt issue in the eurozone, and markets gained on this," Piotr Matys, emerging markets analyst at 4Cast in London, said. "The only question is how long this positive sentiment is going to stay," he said, warning that while the package was substantial the euro zone debt problems may yet come back to haunt markets. The rand bounced with the euro, which climbed off a 14-month low against the dollar, after policymakers announced the safety net for indebted countries and euro zone central banks began buying local government debt. The aid package, hammered out by European Union finance ministers, central bankers and the International Monetary Fund, was the biggest since Group of 20 leaders rolled out support measures after the collapse of Lehman Brothers in 2008. South African bonds rode the rebound, with yields jumping on receding fears of debt defaults by Greece and other euro zone countries. Some investors are still hoping for a local interest rate cut later this week, although chances of more policy loosening, after March's surprise reduction, are small, given comments by Reserve Bank Governor Gill Marcus last month signalling no change. The yield, which moves inversely to the price, on the 2015 bond was down 17 basis points for the session at 8.105 percent, while the 2036 yield was 15 basis points lower at 8.905 percent. On the bourse, gold miners took a knock despite the overall gains, as investor sentiment shifted from safe-haven stocks to the broader market, dragging the metal's price down. AngloGold Ashanti, the world's third-largest gold miner, dropped 2.88 percent to 310.80 rand, while its rival Gold Fields fell 1.51 percent to 96.99 rand. (Reporting by Gordon Bell, Diana Neille and Gugulakhe Lourie; editing by Tony Austin) (For more Africa cover visit: http://af.reuters.com -- To comment on this story email: SouthAfrica.Newsroom@reuters.com) Keywords: MARKETS SAFRICA/CLOSE (gordon.bell@thomsonreuters.com; +27 11 775 3151; Reuters Messaging: gordon.bell.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.