THE vulnerable rand was weaker in afternoon trade, well off the morning's best levels on Monday, with the excitement over the weekend Greek election results having fizzled out as analysts say the situation remains much the same -uncertain.

The local currency had initially absorbed the Greek poll results positively but lost its gains in midday trade as the uncertainty in the euro zone persisted.

Media reports said fresh worries over debt problems in Spain and Italy wiped out initial relief from a victory for pro bail-out parties in Greece that had sparked an earlier rally on the markets.

Spanish and Italian government bond yields rose, dogged by concerns about Spain's fiscal and banking problems.

Spanish 10-year government bond yields rose 22 basis points on Monday to 7,14%, pushing the nation's implied borrowing costs to their highest since the euro's inception, the reports said.

At 3.49pm the rand was bid at R8,3464 to the dollar from its previous close of R8,2475. It was bid at R10,5138 to the euro from its previous close of R10,4887 and at R13,0687 against sterling from R12,9599 before.

The euro was bid at ?1,2594 to the dollar, from a previous close of ?1,2718.

"The markets absorbed the Greek poll news positively, but there is still risk in the market. Players are still cautious and will be watching Europe for direction.

"The Spanish situation is also of concern and on the back of that many believe the rand will remain slightly weaker ahead of other data that is due this week," a local trader said.

Meanwhile, Dow Jones Newswires reported the euro surrendered its initial post-Greek election gains against the dollar in European trading on Monday

The currency fell back to levels seen late on Friday as doubts emerged over the Greek victor's capacity to form a strong Greek government and as Spanish borrowing costs surged to a new euro-era high.

The currency pair traded to as low as $1,2618 - over a cent below the highs seen in Asian trading after the election results from Greece showed the pro-bailout conservative New Democracy party winning by a slim margin.

But with data showing bad debts held by Spanish banks rose to an 18-year high in April and tough talks still to come to form a new coalition government in Greece, financial markets soon bubbled up with renewed signs of stress, dragging on the euro and supporting the dollar against a range of currencies.

The cost of insuring against a default on Spanish government bonds hit a record high, while yields on Spanish 10-year government bonds pushed beyond seven percent for the first time since the launch of the euro, as attention shifted from Greece back to Spain

Investors awaited the official word on the level of extra provisioning that will be demanded of Spanish banks.

"It's all about Spain," said Carl Hammer, chief currency strategist at Swedish bank SEB in Stockholm.

"Greece is too small to have a systemic impact, but Spain isn't, and it's hard to find anything to alleviate the pressure.

"The market is so sceptical that it's hard to come up with anything to boost sentiment," Mr Hammer said.

Emerging market currencies such as the relatively volatile Hungarian forint also reversed its early-morning gains.

The euro traded as low as ?290,54 against the forint, but later rose to ?29,34.

The rand also did an about-turn, while the Australian dollar traded down close to parity with the dollar after surging in Asian hours.

Greece's New Democracy party was on Monday set to begin talks with other parties on forming a pro bail-out coalition government.

If successful, it could end a weeks-long political stalemate and pave the way for Greece to resume negotiations with international creditors on badly needed financial aid.