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#RandReport: Rand loses steam as risk demand slows, stocks up

The rand slipped to 0.7 percent 14.4355 per dollar, retreating from 10-week highs.

By 1545 GMT the rand had slipped 0.7 percent to 14.4355 per dollar. Picture:EWN.

JOHANNESBURG - The rand backtracked on Wednesday as global demand for risk assets eased and investors held off making major bets ahead of policy decision by the Bank of England.

Stocks were slightly higher, in line with emerging markets as investors' continued search for higher yields helped equities hold on to recent gains.

By 1545 GMT the rand had slipped 0.7 percent to 14.4355 per dollar, retreating from 10-week highs as lingering worries about domestic growth and a feeling amongst investors that the unit was overbought weighed.

"The rand rally may overdone now. The market looks exhausted, though there might be a brief rally if the Bank of England decides to add more stimulus," said currency trader at Capilis Asset Management Giacomo Bonavera.

The rand soared to its firmest since 3 May in the previous session as demand for high-yielding emerging assets swelled following Britain's decision to exit the European Union two weeks ago.

But on Wednesday global risk appetite receded as attention shifted to the BoE's policy meeting on Thursday, where the bank is expected to cut interest rates and up its bond buying program to cushion the economy from the shock of the Brexit vote.

Government bonds inched firmer, with the yield on the government paper due in 2026 dropping 1 basis point to 8.71 percent.

On the bourse, the benchmark Top-40 index ticked up 0.50 percent to 46,288 points while the All-Share index strengthened 0.51 percent to 52,814 points.

Emerging stocks touched new eight-month peaks on Wednesday amid a worldwide investor dash for higher-return assets as expectations of a British interest rate cut grew, while additional Japanese stimulus lifted global equities.

Among the top blue-chip gainers were European-linked stocks that have recovered after being hit hard in the wake of Britain's vote to quit the European Union, traders said.

"There's been an appetite for higher risk shares again after the initial worry about the Brexit situation," said Afrifocus Securities portfolio manager Ferdi Heyneke.

Investment firm Brait rose 3.69 percent to 128.00 rand, food services company Bid Corporation climbed 3 percent to 258.51, and investment bank and asset manager Investec strengthened 1.67 percent to 87.85 rand.

Trading was subdued, with a total of 208 million shares changing hands compared with last year's daily average of 296 million.