The rand was steady and trading within a relatively narrow range in late trade on Thursday after earlier having been forced to give up some of the last few days' gains on a renewed rise in risk aversion.

By 3.45pm on Thursday the rand was bid at 7.6113 to the dollar from a previous close of 7.5731. It was bid at 11.7453 to the euro from a previous 11.6515 and at 14.9267 against sterling from 14.7843 before.

The euro was bid at US$1.5426 from US$1.5398 overnight, while gold was quoted at $879.45 a troy ounce from $868.80 overnight.

South African market analysts said volatility on the stock market was a potential threat to the carry trade that had been helping to extend the rand's recovery.

"This has been borne out overnight as Wall Street's losses have once again fuelled a fresh surge in risk aversion," they explained.

Dow Jones Newswires reports that the euro is gaining ground versus the dollar Thursday morning in New York as the European Central Bank retains its hawkish tone on inflation concerns.

The euro rose as high as $1.5434 from about $1.5350 before ECB President Jean Claude Trichet began his press conference, following the central bank's announcement that it is holding its key interest rate steady at 4.0 percent for another month.

At first, the euro staggered against the greenback as Trichet referred to downside risks to growth that may have more of a negative impact on the economy than previously expected. However, he also warned of strong short-term upward pressure on inflation, suggesting the ECB is unlikely to cut rates, and thereby the euro's ascent against the buck, in the near future. Trichet said the ECB is very much in the same mood on inflation as in April.

"Upside risks to price stability prevail over the medium term," he said.

Bonds range-bound as ECB pauses

Bonds remained wedged within their tight trading range during the afternoon on Thursday as SA's main trading partner decided to keep interest rates on hold.

By 3.57pm the short-term government R153 bond was at 10.345 percent from its previous close of 10.305 percent, while the medium-term R157 was at 9.460 percent from its previous close of 9.440 percent. The longer-term R186 bond was at 9.300 percent from its previous close of 9.260 percent.

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