S.African stocks down for third day on weak copper prices

By Gugulakhe Lourie and Xola Potelwa

JOHANNESBURG (Reuters) - The South African resource-heavy bourse fell for a third straight day on Tuesday as weaker copper and other metal prices knocked resource stocks lower with the Libyan turmoil feeding investor worries.

Libya, along with a weaker euro also weighed down on the rand currency which faltered against the dollar after trading at a seven week high in the previous session.

Government bonds followed moves on the rand and the two benchmark notes for longer and shorter dated debt closed weaker on the day compared to Monday. However a well-covered government debt auction earlier in the session helped to cushion the fall.

The JSE Top-40 index of blue chips was down 1.6

percent to end 28,701.40 and the broader All-share index dropped 1.46 percent to 31,827.42.

"It's mostly the resources shares that have taken the market lower on weaker platinum and copper prices," Ferdi Heyneke, a portfolio manager at Afrifocus Securities said.

Copper fell to a two-week low and other metals hit their lowest since the end of January.

Bourse and mining heavyweight BHP Billiton dropped 3.62 percent to 267.70 rand and rival miner Anglo American lost 3.3 percent to 361.19 rand.

Lonmin, the world's third-biggest platinum producer, was down 3.89 percent to 202.49 rand and Impala Platinum lost 1.36 percent to 198.25 rand on weaker platinum prices.

"We think they have run hard and that the prices are stretched," Investec Asset Management Director, John Green, said at Reuters Africa investment summit, when asked about the prices of South African stocks.

Old Mutual, bucked the trend, gaining 1.93 percent to 15.31 rand after the Anglo-South African financial conglomerate posts forecasts-beating annual results.

RAND WEAKENS

The rand was 0.47 percent weaker at 6.9052 as of 1547 GMT, off a close of 6.8728 on Monday.

The dollar is finding the 6.85 support level difficult to breach, having tried last week and in this session and failed. It went as close as 6.8520 rand before retreating to 6.93 rand levels in this session.

"(The rand's weakness is) based on the movements on euro/dollar, the euro pulled back on the back of European debt fears emerging once again and the rand reacted accordingly," Craig Zaayman, managing director at Purple Capital Treasury.

The dollar has however not managed to breach 6.85 convincingly, also the 61.8 percent retracement of its rise this year, since early January during its uptrend which started reversing in mid -February

"Its getting a lot of support on that front," Zaayman said predicting some strength still in the rand in coming weeks.

"The medium term, three weeks to a month I do foresee 6.75 on the cards. A lot of indicators are for the rand to be stronger," Zaayman said.

A weekly debt auction earlier in the session provided some support for the bond market. National Treasury sold its 2017 and 2031 government bonds at a bid-to-cover ratio of 2.15 and 2.88 respectively.

The yield on the benchmark 2015 paper closed at 7.94 percent from 7.91 percent on Monday while the 15 year bond slipped to a 9.01 percent close from 9.005.

Tue, 08 Mar 2011

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