South African rand weaker as risk appetite wanes; retailers buoy stocks

JOHANNESBURG (Reuters) - South Africa's rand retreated on Monday as a stronger dollar boosted by revived bets of an interest rate hike in the United States dented risk appetite, while stocks rose lifted by retailers. By 1530 GMT the rand had weakened 0.7 percent to 14.3980 per dollar, falling for a second successive session after failing to hold a breach of technical resistance around 14.20 in the previous week. With relatively low trade volumes in the session, the retreat from the previous week's rally to a three month best at 14.1620 shifts momentum to the downside towards technical support at 14.5000. Traders expected the rand to remain in a tight range ahead of the U.S. Federal Reserve's policy meeting on Wednesday as investors held off major bets before the rates decision. "Should the Fed indicate appetite for a hike in September, expect the rand to sell-off, especially given that it failed to push lower than 14.30 for any meaningful duration," currency trader at Rand Merchant Bank Isaah Mhlanga said. Gold slipped nearly 1 percent while platinum was down 0.5 percent as appetite for safe haven assets waned, hurting the currencies of exporters like South Africa. Government bonds strengthened, continuing to reap the rewards of a global search for higher yields. At market close the yield on the benchmark 2026 was 2 basis points lower at 8.79 percent. On the bourse the benchmark Top-40 index was 0.6 percent up at 46,545 points while the All-Share index advanced 0.5 percent to 53,293 points. Most retailers were up with Woolworths the biggest gainer among the blue-chips, rising 4.2 percent to 89.92 rand. A strong trading update issued by Shoprite last week attracted foreign buyers' interest and has lifted the entire sector, said Cratos Capital equities trader Greg Davies. "They are looking at emerging markets again and they usually go for retail and financial stocks first," Davies said. Shoprite initially rallied to a 3-1/2 year high of 206.32 rand, but pared gains to close 0.1 percent weaker at 199.34 rand. A weaker oil price, down to levels last seen in May, hurt gold and other resource stocks, Davies said. Shares in Anglogold Ashanti shed 5 percent to 288.90 rand and petrochemical firm Sasol was down 0.9 percent at 397 rand. Trade was muted with around 203 million shares changing hands, compared with last year's daily average of 296 million, according to preliminary bourse data. (Reporting by Mfuneko Toyana and TJ Strydom; Editing by James Macharia)