South Africa stocks lifted by relief rally as Syria crisis eases

September 2, 2013
Electronic board displaying movements in major indices is seen at Johannesburg stock exchange in Sandton
An electronic board displaying movements in major indices is seen at Johannesburg stock exchange in Sandton September 23, 2008. REUTERS/Siphiwe Sibeko

JOHANNESBURG (Reuters) - South African stocks rebounded on Monday from their steepest weekly fall in more than two months as global markets staged a relief rally on a delay in U.S. military action against Syria.

Diversified mining houses African Rainbow Minerals (ARM) and Anglo American lead the blue-chip advance.

They were lifted by a fresh round of purchasing managers' surveys (PMIs) - used as a guide for future levels of economic activity - which showed brighter prospects for the global economy.

PMIs for China indicated activity in the country's vast manufacturing sector was at its highest level in more than a year, easing investor concerns that the world's No. 2 economy was on course for a sharp slowdown.

This is good news for mining companies as it suggests Chinese demand for commodities may pick up.

"Just about the whole world seems to be surprising on the upside on PMIs, except India," Mike Ingram, market commentator at BGC Partners, said.

Johannesburg's blue-chip JSE Top-40 index rose 1.27 percent to 38,346.25 and the broader All-share index added 1.18 percent to 42,725.70.

The delay in the potential U.S. military action and the improving economic data from China and Europe lifted world share markets on Monday.

Investors have been selling off emerging-market assets due to uncertainty about Syria and shifted funds to safe-haven economies.

ARM and Anglo American were the biggest gainers on the Top-40 index, adding 4.66 percent and 3.83 percent respectively.

ARM said on Monday its full-year earnings rose 7 percent but profit halved after it took a 2 billion rand hit on its investment in Harmony Gold.

But its headline earnings per share of 1,735 cents for the 12 months to end June beat the Thomson Reuters StarMine consensus of 1,627 cents.

Bucking the upward trend, gold producers lost ground as mine workers prepared to embark on a potentially crippling strike from Tuesday in the industry.

Sibanye Gold fell 4.74 percent to 10.04 rand and Harmony fell over two percent to 37.82 rand. Sibanye gets all of its production from South Africa and Harmony over 90 percent.

Bullion's spot price also helped pull down gold producers. It edged below $1,400 an ounce as its safe haven status faded.