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South Africa's rand lifted by global risk demand, Afrox leads stock gain

Credit: REUTERS/THOMAS WHITE

South Africa's rand was firmer on Monday, extending gains of the previous week to levels reached a month ago as investors searching for yield were spurred by hopes of a U.S. fiscal package and data showing China's economy rebounding.

Adds latest prices, analyst comments

JOHANNESBURG, Oct 19 (Reuters) - South Africa's rand was firmer on Monday, extending gains of the previous week to levels reached a month ago as investors searching for yield were spurred by hopes of a U.S. fiscal package and data showing China's economy rebounding.

At 1550 GMT the rand ZAR=D3 was 0.5% firmer at 16.4700 per dollar, having opened the session at 16.5300.

House Speaker in the United States Nancy Pelosi said that, while differences remained with President Donald Trump's administration on a wide-ranging coronavirus relief package, she believed legislation could be pushed through before Election Day.

A rally in risk assets was also buoyed by hopes of a coronavirus vaccine after drugmaker Pfizer Inc PFE.N said on Friday it could have a coronavirus vaccine ready in the United States by the end of this year.

China's rebound from the COVID-19 pandemic stayed on course last quarter as gross domestic product (GDP) grew 4.9%, although the weaker-than-expected headline growth suggested risks persisted.

"The local unit requires a firm push in either direction, which is only probable once the much talked about MTBPS (medium term budget), S.A. sovereign ratings decisions and U.S. elections come to pass," said Nema Ramkhelawan-Bhana, an analyst at Rand Merchant Bank.

Government bonds were also firmer, with the yield on the instrument due in 2030 ZAR2030= down 7 basis points to 9.275%.

Equity investors were also looking at global economies for direction, pinning hopes on steady growth in China.

"Despite the miss, China remains the only major economy to post growth for the first nine months of 2020," Hussein Sayed, chief market strategist at FXTM, said.

China is South Africa's largest trading partner.

Topping the gainers, industrial gas supplier African Oxygen AFXJ.J (Afrox) surged 36.49% to a 11-month high after it said on Friday Linde Plc LIN.N, which owns 50.47% of Afrox, has made an offer to buy all the shares in Afrox not already owned by the group.

Banks .JBANKS also rose, with the sector up 4.22%.

Rising COVID-19 cases across Europe however capped gains as investors were concerned over a second wave of the virus, said Cratos Capital equities trader, Greg Davies.

The benchmark Top-40 index .JTOPI was mostly flat at 50,741 points and the All-Share index .JALSH rose 0.21% to 55,161 points.

(Reporting by Mfuneko Toyana, Tumelo Modiba and Nqobile Dludla; Editing by Lisa Shumaker)

((mfuneko.toyana@thomsonreuters.com; +27117753153; Reuters Messaging: mfuneko.toyana.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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