The rand advanced for a second day against the euro amid investor concern that slowing economic growth will worsen the euro region’s sovereign-debt crisis. Bonds gained, sending yield to seven-month lows. The rand appreciated as much as 0.5 percent to 9.5441 per euro and traded 0.4 percent stronger at 9.5562 as of 10:19 a.m. in Johannesburg. South Africa’s currency advanced 0.2 percent to 6.7251 per dollar. The 17-nation European currency fell to the lowest level against the dollar since July 21 after reports on manufacturing yesterday suggested growth in the euro region is slowing. Italian bonds fell, sending the yield on the 10-year securities to the highest since 1997 and pushing the additional yield investors demand to hold the debt instead of benchmark German bunds to euro era all-time highs. “The euro has been under pressure as risk aversion rises and as the Italian bond markets come under pressure,” John Cairns and Nema Ramkhelawan-Bhana, currency strategists at Rand Merchant Bank in Johannesburg, wrote in a research note. “This has given the rand-euro enough momentum to get into the 9.50s.” The rand may decline versus the dollar as stocks and commodity prices tumble on concern a slowing global economy will damp demand for raw materials. Emerging-market stocks fell the most in three weeks and the Standard & Poor’s GSCI index of 24 raw materials slumped for a fifth day after U.S. manufacturing growth slowed and investors speculated China will raise interest rates this month. South Africa’s benchmark stock index headed for a five-week low, led by mining companies including BHP Billiton Ltd. and Anglo American Plc. Bond Yields “The focus has turned very firmly back to growth and it would appear as though the global economy is headed for a significant slowdown,” Tradition Analytics strategists led by Johannesburg-based Quinten Bertenshaw wrote in a research note. “The financial markets are pricing themselves for a significant slowdown in South Africa’s main trading partners.” Bonds gained, driving yields to seven-month lows, on speculation signs South Africa’s economic recovery is faltering will persuade the central bank to leave borrowing costs at a three-decade low even as inflation quickens. The 13.5 percent notes due 2015 climbed 7 cents to 121.93 rand, driving the yield down two basis points to 7.22 percent, the lowest since Jan. 5. “A weak economy remains bullish for local bonds,” Tradition wrote. “The market is prioritizing the weak growth outlook over the recent uptick in CPI inflation.” 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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