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Late US rally props up JSE

Johannesburg - The JSE opened stronger on Wednesday, reacting to the US market's late rally on Tuesday.

A local trader said that the Dow Jones closed up 150 points and had buoyed markets in spite of news of a downgrade in Italy.

He said that the rand being slightly firmer was perhaps holding the markets back a little.

By 09:08 local time, the JSE All Share [JSE:J203] index had picked-up 1.12%, with resources up 1.26%, platinum miners gaining 1.11%. Gold stocks, however, weakened 1.28%. Banks lifted 1.15%, industrials were 1.13% higher, while financials generated 0.94%.

The rand was bid at R8.13 to the dollar, from R8.26 at the JSE's close on Tuesday. Gold traded at $1 627.82 a troy ounce from $1 625.79/oz at the JSE's previous close, while platinum was at $1 443.50/oz, from $1 475.50/oz previously.

Dow Jones Newswires reported that Asian stock markets were mixed on Wednesday as investors remained cautious after the recent steep selloffs, with the Tokyo and Seoul markets falling.

European bourses may catch a knee-jerk reaction to the late Wall Street comeback and start higher, but momentum is likely to fizzle quickly as the eurozone's troubles fester without a cure.

Joshua Raymond at City Index noted, "The last few months bear all the same...signs that preceded the previous banking crisis in 2008. And with the deep losses suffered by major banks still living fresh in the memory of investors today, who can blame investors for selling their bank holdings?"

The eurozone's problems remain paramount for markets.

"Without a solution for the eurozone debt crisis, banks will continue to be very shaky. And as most predict there is no real solution for the eurozone, expect the banking sector to continue to be plagued by fear...A strong and healthy economy needs a strong and healthy banking sector and we are a very long way from that currently," said Louise Cooper, markets analyst at BGC Partners.

Moody's Investors Service on Tuesday slashed Italy's government bond ratings by three notches, citing fragile investor confidence and expectations that the economy will remain relatively weak in the next two to three years, according to a senior credit officer at the ratings firm.

US stock futures are lower on Wednesday, after markets staged a fierce comeback in the final hour of trading on Tuesday after a report that European Union finance ministers are discussing ways to recapitalise the region's banks.

The reversal late in the session came after the Financial Times reported EU finance ministers, meeting in Luxembourg, concluded that they had yet to do enough to convince financial markets that Europe's banks could withstand the debt crisis. 

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Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
+1.2%
Silver
24.87
+0.9%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
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