S.African stocks, rand slip on dip in risk appetite

JOHANNESBURG, (Reuters)

South African assets dipped on Tuesday, knocked by a global drop in risk appetite and lower commodity prices that took the rand and stock market off multi-week highs.

Government bonds also retreated slightly as a regular bond auction attracted less demand than in previous weeks. Johannesburg's bourse fell for the first time in seven days, tracking global equities with Liberty International the worst performer after posting below-forecast results.

The resource-heavy blue chip Top-40 .JTOPI was off 0.89 percent at 25,032.64 points, retreating from Monday's near 7-week high, and the broader All-share index .JALSH dipped 0.78 percent to 27,898.14 points.

World stocks slipped and oil fell nearly 2 percent, while the yen rose broadly as investors grew cautious after a recent rally in riskier assets. "It's not unexpected after the big moves the market has had," Ferdi Heyneke, a portfolio manager at Afrifocus Securities said. "Commodity prices are also under a bit pressure due the firming dollar."

UK-based real estate Liberty International LBTJ.J shares fell 5.09 percent to 54.10 rand after posting its full year results and confirming demerger plans.

The rand ZARD3 was trading at 7.4050 against the dollar at 1530 GMT, 0.3 percent softer than its previous close in New York after dipping to 7.4650 earlier in the day. The local currency was at 10.0454 to the euro. It had touched a two-month high of 7.3625/dollar and 9.9742 against the euro, its strongest level in three years, on Monday.

Analysts said a lower price of South African export gold -- the precious metal fell one percent as the dollar firmed against most currencies -- and a drop in equities globally weighed on the local currency.

"Generally sentiment is good, the only reason dollar-rand has ticked up today was because of external factors ... external influences are taking the shine off generally positive rand sentiment," Nicholas Kennedy, emerging markets analysts at 4Cast, said.

Risk appetite, boosted partly by renewed optimism on the U.S. economy, that had helped emerging market assets gain in the previous session, receded on Tuesday, although a steady start on Wall Street helped the rand pare early losses.

Sentiment is also improving towards growth in South Africa's economy, with a recovery from last year's recession showing signs of gathering pace. Data this week is expected to show manufacturing output grew 6.1 percent year-on-year in January, while a survey indicated business confidence improved in the first quarter.

Government bonds added to recent losses with investors cutting back on expectations interest rates will fall again in the current cycle, and after relatively weak demand at the regular auction.

An economic recovery has reduced the need for another interest rate cut, despite hopes inflation may surprise on the downside and with the National Treasury giving the central bank more leeway in its decision-making to help boost growth.

The yield, which moves inversely to the price, on the 2015 bond ZAR157 was up 3.5 basis points for the session at 8.255 percent, while the 2036 ZAR209 yield added 0.5 basis points to 9.015 percent.

On the bourse, ArcelorMittal's South Africa unit ACLJ.J was down 2.77 percent to 89.50 rand. Market operator, JSE Limited, wants ArcelorMittal to explain a delay in telling shareholders that it could lose a discount on iron ore supply.

Mining stocks also fell, tracking falls in metal prices, hitting Harmony HARJ.J by 3.12 percent to 71.50 rand. In earnings news, Firstrand FSRJ.J was down 1.02 percent to 19.35 rand after posting a modest drop in first-half headline earnings per share.