The rand was weaker in early trade on Monday, the victim of risk appetite sapped by renewed concerns out of Europe following a poorly received Italian government bond auction.

At 8.13am, the unit slumped to R7,8410, compared with R7,7156 at the JSE's close on Friday. It also surrendered to the euro at R10,9719, compared with R10,906 previously, and against the sterling at R12,5283, compared with R12,4327 previously.

In the first euro-zone auction after the region's leaders struck a deal last week to bolster the European Financial Stability Facility and hack 50% off Greek debt, sales of Italian bonds on Friday saw the 10-year yield gap between Italian and German bonds widen to 378 basis points, about 10 basis points wider on the day. Italy also paid a record high cost of more than 6% to borrow on the debt market.

In a note, a team of currency researchers from Standard Bank said this implied that despite last week's deal, participants remained wary of European debt.

"Safe-haven assets such as the dollar have benefited from this latest bout of risk aversion. This morning, Asian equity markets are down across the board, and rand short-covering has ground to a halt," they said.

The MSCI index of Asia Pacific shares outside Japan fell 0,2% on Monday, after posting its best week in nearly three years after the euro-zone deal sparked a significant relief rally, while the Nikkei opened down 0.4%, weighed by the Japanese yen's persistent strength and worries about Japanese companies' earnings.

In the US, the S&P 500 is up more than 13% this month, on pace for its biggest monthly gain since October 1974 as US companies report stronger earnings.

John Cairns and Nema Ramkhelawan-Bhana, analysts at Rand Merchant Bank, said in a note the dollar/rand exchange could break lower in coming weeks after dipping below the R7,78 mark last week, and given its underperformance compared with international markets, but downside moves would not come on Monday given the Japanese currency intervention and a busy data calendar.

"With the dust settling down somewhat, the rand's underperformance is becoming apparent. Consider that US equities will today end their best October in 37 years, euro/dollar is trading back at where it was when dollar/rand was in the R6,90s and even South African equities are at a six-month high," said Mr Cairns and Ms Ramkhelawan-Bhana.

"The lack of capital inflows might have explained this underperformance at first, but we're starting to see large foreign buying of our local bonds once again. The rand has scope to move stronger assuming - and this is a very big assumption - that global markets don't turn around and have their worst performance in 37 years."

Standard Bank's researchers said the rand had failed repeatedly to breach the R7,70 level last week, and it has therefore started this week on the back foot because of increased risk aversion.

"If rand bears can breach R7,91, a return to R8,06 would be possible in the short term," they said.