CAUTIOUS optimism over the Greek election result yesterday pushed the rand to a high of R8,23/$1 as it advanced for a fifth day in its longest winning streak in more than three months.

But the currency later gave up those gains as uncertainties over the debt crisis in the euro zone, which have weighed on risk sentiment for months, resurfaced.

The rand was at R8,33 to the greenback by the close yesterday, down 0,17% from Friday's close at R8,35/$1.

"The rand remains very volatile in the current environment and it will remain highly vulnerable to any shifts in global risk appetite," Danske Bank said in a note yesterday.

The euro fell yesterday as initial enthusiasm over victory for pro-bailout parties in Greek elections gave way to worry about the nagging debt crisis still facing the euro zone.

Voters gave a majority to parties supporting Greece's bail-out on Sunday, easing fears of a break-up in the euro zone. Greece's conservative leader pushed yesterday for a new coalition government, pledging to soften the punishing austerity programme despite opposition from Germany.

But a brief relief rally on international financial markets quickly fizzled out as it became clear that Antonis Samaras's New Democracy had failed to win a convincing popular mandate to implement the deep spending cuts and tax increases demanded by the European Union and the International Monetary Fund.

Investors also awaited news from Mexico, where world leaders at a Group of 20 summit were set to put pressure on the euro zone to outline a lasting strategy.

The swift reversal in sentiment was also fuelled by data showing bad loans at Spanish banks rose to their highest since April 1994. "The consensus is that it's a weak government in Greece," said Steven Bell, portfolio manager at GLC hedge fund in London.

"We have avoided 'drachmageddon', but we're still in a very weak situation. It's almost like, 'Let's move on from Greece and let's focus on Spain'."

Spanish 10-year bond yields were 26 basis points higher at 7,18% after hitting 7,30% earlier yesterday, the highest in the euro zone's history. Yields over 7% are considered unsustainable.

Equity markets in Europe reversed early gains to finish flat. Falls of 3 % and 2,9% for Spain's IBEX and Italy's FTSE MIB indexes pushed regional shares lower. Wall Street mostly fell yesterday, pulled down by European concerns and data showing a weakening US economy.

Tom Schrader, MD of US equity trading at Stifel Nicolaus Capital Markets in Baltimore, said there was still great uncertainty about Spain's banking sector. "As we go through this period of indecisiveness ... you're going to see the markets basically whip around in a sideways pattern."