The rand weakened for a second day against the dollar on concern Europe’s sovereign-debt crisis will spread to Italy and on speculation China will take action to cool growth, sapping demand for riskier assets. The currency of Africa’s biggest economy declined as much as 0.7 percent to 6.7569 per dollar, and traded 0.6 percent weaker at 6.7490 as of 10:36 a.m. in Johannesburg. It gained 0.3 percent to 9.5450 per euro. The euro fell to a two-week low against the dollar after Die Welt reported that the European Central Bank is seeking to expand a fund so it could aid Italy. Commodity prices tumbled and South Africa’s benchmark stock index dropped to the lowest in more than a week, led by commodity exporters including Anglo American Plc and BHP Billiton Ltd., after China’s consumer price index quickened more than analysts’ expectations in June. “The news flow over the last 72 hours has been almost uniformly bad for risk-taking,” BNP Paribas SA analysts led by London-based Paul Mortimer-Lee said in an e-mailed research note. “We think that Chinese inflation could prove most problematic in the medium term but markets will focus on the Italian debt issue in the coming days.” A European bailout fund may have to be doubled to 1.5 trillion euros ($2.1 trillion) to cover a crisis in Italy, the ECB said, according to the German newspaper Die Welt. The Financial Times cited unidentified senior officials as saying European leaders are prepared to accept that Greece should default on some of its bonds as part of a new bailout plan for the country that would put its total debt levels on a sustainable footing. Emerging-Market Selloff “Reports that the ECB might need to provide additional assistance for debt-laden Italy have seen risk aversion return,” Standard Bank Group Ltd. analysts led by Johannesburg- based Michael Keenan said in a research note. “The dollar, gold price and Swiss franc are benefiting from their traditional safe-haven status, while risky asset classes such as equities and emerging-market currencies are selling off.” China’s consumer-price index increased 6.4 percent in June from a year earlier, the National Bureau of Statistics said on July 9, exceeding the 6.2 percent median estimate of economists surveyed by Bloomberg. The government will say on July 13 that gross domestic product expanded 9.3 percent in the second quarter from a year before, according to a separate survey, down from 9.7 percent the previous quarter. China is the biggest buyer of South African exports, according to Department of Trade and Industry data. “China will likely continue to slow money growth to contain rising price inflation,” Tradition Analytics researchers led by Johannesburg-based Quinten Bertenshaw said in a research note. “This risks causing a substantial slowdown in the economy.” Bonds declined, snapping a five-day rally. The 13.5 percent notes due 2015 dropped 8 cents to 121.42 rand, boosting the yield two basis points, or 0.02 percentage point, to 7.42 percent. The 6.75 percent securities due 2021 fell 10 cents to 89.74 rand, driving the yield up two basis points to 8.31 percent. To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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