South Africa's rand firms, but stocks retreat as equity mood sours

JOHANNESBURG (Reuters) - South Africa's rand firmed on Tuesday as risk currencies were lifted by Hillary Clinton's performance against Donald Trump in the first debate between the U.S. presidential candidates. But stocks soured in line with global peers on worries about European banks. By 1530 GMT the rand had firmed 1.48 percent to 13.5075 per dollar, compared to its close at 13.7100 overnight in New York, a second consecutive session of gains. Government bonds were on the backfoot, with the yield on the benchmark 2026 issue up 6 basis points to 8.61 percent. In the absence of any local data releases, the rand has been driven by offshore sentiment. Last week's rally was triggered by the central bank's decision to hold rates, sustained by improved in-flows and the continued hunt for yield globally. "Markets have breathed a sigh of relief this morning as the first U.S. presidential debate drew to a close," Standard Bank trader Inshaan Omar said in a note. But the equities mood in Europe soured as Deutsche Bank shares hit another record low on nagging worries about the lender's health. [MKTS/GLOB] Mood swings in Europe often hit South Africa because the time zones are the same or similar and because its blue chips are followed by big funds. Decliners in Johannesburg included MTN, Africa's biggest telecoms company. Its shares fell 3.4 percent to 119.77 rand on news that lawmakers in Nigeria's parliament had agreed to probe an allegation that the company illegally transferred $13.92 billion out of the West African country. The benchmark Top-40 index slipped 1.26 percent to 44,397 while the All-share index fell 1.13 percent to 50,899. Momentum indicators tracked by some analysts suggest both indexes may soon stray into oversold territory, which could stem further declines in the short term. (Reporting by Mfuneko Toyana and Ed Stoddard; Editing by Robin Pomeroy)