Both the rand and South African bonds were looking slightly better in thin noon trade on Thursday.

Bonds were a few pips firmer as they tracked the perkier rand. The local currency had firmed against the greenback due to the euro's modest recovery against the dollar in European trading hours.

By 11:50, the benchmark R157 bond was trading at 6.750% from its previous close of 6.780%. The R207 was bid at 7.945% and offered at 7.915% from a previous close of 7.950% and the R186 was bid at 8.530% and offered at 8.505% from its close of 8.540%.

Earlier, a bond trader noted that conditions were very thin and were expected to remain so until the second week of January when players started trickling back to work after the December holiday break.

The trader confirmed that activity would wind down around noon on Friday ahead of the Christmas holidays.

The equity market also closes at midday on Friday.

Foreigners were net sellers of R232.917m of South African bonds including repo transactions on Wednesday after net sales of R640.254m of local bonds on Tuesday, data released by the JSE shows.

Nominal cumulative volume was R27.041bn on Wednesday from R56.813bn on Tuesday.

Foreigners were net sellers of R225.358m of South African bonds excluding repo transactions on Wednesday after net sales of R644.259m of local bonds on Tuesday.

For the year to date, foreigners have been net buyers of R45.892bn worth of local bonds, excluding repo transactions.

In 2010 foreigners bought net R57.064bn rand worth of local bonds, excluding repo transactions.

For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R36.017bn of local bonds. In 2010 they bought net R44.541bn worth of bonds.

At 11:40 local time, the rand was bid at R8.1929/$ from its previous close of R8.2322/$. It was bid at R10.7309/? from R10.7223/? before, and at R12.8515/£ from R12.8828/£ previously.

The euro was bid at $1.3099 from its previous close of $1.3036.

Meanwhile Dow Jones Newswires reported that the euro had recovered somewhat against the dollar although there were still concerns that the stronger-than-expected demand for the European Central Bank loans emphasised the severity of Europe's funding crisis and also raised concerns about whether the banks would use the money to buy sovereign debt.

Investors were still assessing the ECB's inaugural longer-term refinancing operation, which had yielded a mixed response from the market.

The ECB's operation on Wednesday saw 523 banks take ?489,19bn in low-interest loans, the largest ever single allocation of ECB liquidity.

I-NET BRIDGE