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SA shares increase on global rush for equities

The benchmark Top-40 index climbed 1.44%, while the broader All-Share index rose 1.3 percent.

A woman walks past a stock exchange board. Picture: AFP.

South African stocks extended their gains to a third trading day on Tuesday, led by coal producer Exarro and petrochemicals group Sasol, as policy support from Japanese and European central banks drove world shares higher.

The global rush to stocks propelled Johannesburg's key indices over one percent higher to within easy reach of recently-scaled peaks despite the release of data on Tuesday showing growth in Africa's largest economy had slowed to a snail's pace, sending the rand to four-year lows.

South Africa's economic growth braked to 0.9 percent quarter-on-quarter in the first quarter of 2013 from 2.1 percent in Q4 2012 as manufacturing output shrunk.

The benchmark Top-40 index climbed 1.44 percent to close at 37,445.94, while the broader All-Share index rose 1.3 percent to 41,971.17.

The rand's fall, with a few exceptions such as Exxaro, failed to light much of a fire under mining shares - they benefit from a weaker exchange rate because they earn dollars - with the mining index underperforming and only adding around 0.50 percent.

This underscored investor concerns about labour unrest in the sector and weak commodity prices.

With few positive domestic factors - mounting labour unrest, slow growth and accelerating inflation - and technical indicators suggesting the main stock indices are near overbought levels, only global hopes for monetary easing and the weak rand are lifting South African shares at the moment.

"People are buying on the idea of the weak rand. But manufacturing is weak so there are no fundamentals there to support this," said Christie Viljoen, an economist at NKC Independent Economists.

The hope is that the weak rand lifts exports.

The global stock surge lifted oil prices and helped Sasol gain 2.5 percent to 448.50 rand. Exxaro, which produces coal, added over 5.5 percent on global economic stimulus hopes which should spur demand for its product.

Africa's biggest packaging company Nampak Ltd bucked the trend, falling almost 13 percent to 32.53 rand, its biggest percentage daily decline in more than five years.

Nampak's poor performance resulted from a failure to grow its profits, after the company cut prices to secure long-term contracts in its home market.

An average of 203 million shares changed hands, according to preliminary bourse statistics. Advancers outpaced decliners 172 to 119, while 71 shares were unchanged.

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