South African stocks felt the heat of continued selling on mobile carrier MTN, weaker economic growth data and falling gold and platinum prices on Tuesday. However, an equities dealer opined that an improved Dow and weaker rand may add some upside impetus tomorrow.

Another feature of the day was a loss of 13.75 rand by petrochemicals company Sasol as Brent crude futures lost 2.04 percent to $129.60 a barrel.

The only positive on the day was the industrial sector, which eked out a gain of 0.47 percent.

At 5pm, the all share index was down 0.79 percent. Resources fell 1.75 percent, while the gold and platinum mining indices were off 2.20 percent and 2.13 percent respectively.

Banks gave up 0.45 percent and financials slipped 0.24 percent.

The rand was bid at 7.75 to the dollar from 7.69 when the JSE closed on Monday, while gold was quoted at $908.65 a troy ounce from $927.60 at the JSE's last close. Platinum was at $2140 an ounce, a telling loss of $37.50.

"It is pretty bleak, with big volumes coming on MTN. Some investors were in over their heads and so there are now margin calls," explained an equities dealer.

"I see the Dow has opened firmer and the rand is at 7.75 to the dollar, so tomorrow we might see something from the Dow and resources shares," concluded the dealer.

Another dealer said the first quarter GDP data was a "shocker".

He said it would place more pressure on banks and financials.

South Africa's real gross domestic product at market prices on a quarter-on-quarter seasonally adjusted annualised basis rose by 2.1 percent in the first quarter of 2008 from 5.3 percent in the fourth quarter of 2007, Statistics South Africa said on Tuesday.

This is the lowest growth since the third quarter of 2001, when the seasonally adjusted real GDP was 1.1 percent, and it is below the 2.6 percent growth rate the market had expected.

Telecoms group MTN tumbled 2.15 percent to 144.89 rand on fresh rumours that it might turn a hunter for India's Reliance Communications.

"The market does not like the way the story is developing," said Hennie Fourie, a trader at Cape Town-based PSG Konsult.

Talks between MTN Group Ltd and Reliance Communications Ltd were focusing on a structure that would ultimately see the South African operator acquiring India's second-largest mobile phone operator to create a top-10 global mobile industry player, Dow Jones Newswires reported on Tuesday, citing sources familiar with the situation.

Rival Telkom was up 50 cents to 129 rand. Mobile phone group Vodacom, of which Telkom owns 50 percent, said earlier it had increased its total customers by 12.7 percent to 34 million in the year ended March.

On the resource index, Anglo American was down 4.70 rand at 522.25 rand and BHP Billiton lost 2.09 percent to 306.21 rand.

Among gold miners, AngloGold Ashanti was off 1.76 percent to 302 rand, Harmony dipped 3.33 percent to 94.75 rand and Gold Fields gave up 2.14 percent to 103.93 rand.

Platinum miner Anglo Platinum declined one rand to 1418 rand, while Impala Platinum lost 3.36 percent to 345 rand.

Among industrials, brewer SABMiller was up 2.03 percent to 201 rand on the back of vague weekend reports that Belgium-headquartered brewer InBev might seek a tie-up with the group, which also trades in London.

Pioneer Foods closed at 27.50 rand, a small loss of 50 cents. It had earlier reported diluted headline earnings per share of 140 cents for the six months ended March from 127.7 cents a year ago.

An interim dividend of 30 cents was declared – up 11.1 percent.

"Pioneer Foods' results were good, but they still have a price-fixing scandal hanging over them," said Fourie.

Pressured by poor economic growth data and prospects of a worsening inflation outlook ahead of inflation data this week, banks and financials were mostly down.

Standard Bank garnered a curmudgeonly four cents to 87.49 rand, but Nedbank fell 1.52 percent to 102.90 rand, FirstRand was off 1.19 percent to 15 rand and Old Mutual gave up six cents to 17.24 rand.

All eyes will be on inflation data on Wednesday for signs of what can be expected on the interest rate front.

Consumer inflation excluding interest on mortgage bonds (CPIX) – the measure used by the South African Reserve Bank for its inflation target - is expected to have increased at a slower 9.9 percent year-on-year in April from the heady 10.1 percent in March, an I-Net Bridge survey has found.

This will, however, be the thirteenth month running that CPIX has been above the six percent upper target limit, and will be higher than the 6.3 percent seen a year ago.

Forecasts ranged from 9.8 percent to 10.3 percent, but only two of the ten analysts surveyed saw the increase pipping last month's level.

Statistics South Africa will release the data at 11.30am local time on Wednesday, 28 May.

Headline inflation – the percentage change in the consumer price index – is expected to have increased at an unchanged 10.6 percent, but again surpassing the high levels seen in early 2003 and above the 7.0 percent seen a year ago.

I-Net Bridge