Johannesburg - South African shares tumbled to their lowest level in two months, while the rand slid toward a nine-week trough against the dollar, hit by continued concern about Greek debt and a flight to low-risk assets.
Stock markets worldwide suffered heavy losses on Tuesday in rumour-driven trade on fears the Greek debt debacle will defy an international bailout and spread to Spain and Portugal.
Contagion anxiety also hit the euro, which fell to a one-year low against the dollar at 1.3023. The single currency later traded at 1.3035 dollars against 1.3187 on Monday.
At 17:46, the rand traded at 7.55 to the dollar, down 1.92% from Monday's close at 7.4075, having earlier briefly touched 7.5830, its weakest level since March 3, Reuters data showed.
"The main driver here has been the problems over Greece ... that is having a knock-on effect on risk in general. I think today's move is probably a reaction also to yesterday being a UK holiday so it's probably a little bit exaggerated on the day," said Duncan Howes, a currency trader at Absa Capital in Johannesburg. South Africa's blue-chip top-40 index fell by 2.79% to 24 886.74, its lowest since early March.
The all-share index gave up 2.4% to 27 935.85. In Europe losses ranged from 2.56% in London to 5.41% in Madrid, with Paris giving up 3.64%, Frankfurt 2.6% and Lisbon 4.21%.
On Wall Street the Dow Jones Industrial Average fell by 225 points to 10 926.77 - its biggest loss in three months.
Investors worried that a $145bn rescue crafted by the eurozone and the IMF will prove inadequate to resolve the Greek crisis and - worse - that the Greek mess will infect other vulnerable economies, notably Spain and Portugal.
Market jitters intensified on reports of mounting public outrage in Greece, where angry workers stormed the Acropolis to protest deep wage and spending cuts planned by the government ahead of a general strike on Wednesday.
The Spanish exchange was rocked on Tuesday by rumours that Madrid, grappling with a huge public deficit and mired in recession, might be looking for a lifeline from the International Monetary Fund.
The reports were angrily dismissed as "absolute madness" by Spanish Prime Minister Jose Luis Zapatero. Tensions were further heightened by concerns that ratings agencies Fitch and Moody's might slap credit downgrades on Spanish debt, just as a third agency, Standard & Poor's, had done last week.
But both Moody's and Fitch insisted Tuesday they were not currently reconsidering their ratings on Spain.
Gold shares shine
Greece turned to the eurozone and IMF for help after its borrowing costs surged on critical bond markets as the scope of its debt and public deficit crisis became fully apparent.
After easing somewhat on Monday, the interest rate that Greece would have to pay on new 10-year-sovereign bonds widened sharply to 9.195% from 8.498%. The rate, or yield, at one point shot up beyond 11% last week.
SA government bonds also weakened on Tuesday and subsequently yields rose. The yield on the benchmark 2015 bond was up 7.5 basis points at 7.925% while that for the 2036 added 5.5 basis points to 8.855%.
Shares of major South African companies also reflected the flight from riskier assets. Major losers included miner African Rainbow Minerals, which fell 5.8% to R186. Standard Bank, South Africa's largest bank, fell 2.2% to R113.
Shares of gold miners were among the few gainers, buoyed by expectations of further industry consolidation after Australia's Newcrest Mining agreed to buy rival Lihir Gold.
Gold Fields gained more than 1%, and AngloGold Ashanti rose 0.7%.
"It's also true that gold companies are up because of expectations of further acquisitions in the sector," said one Johannesburg trader.
"They'd most probably go international because there are basically three big ones left here, but there may be a possibility... of take-overs here as well."
- Reuters, AFP and AP