BOOSTED by a deal by European politicians to support the troubled Spanish banking system, the rand and the JSE rallied on Friday on the back on improved risk sentiment.
Equities, commodities and other risk assets had come under pressure over the quarter amid investor concern over the fate of the global economy.
Local markets were on Friday being driven by "optimism around Europe", said Ryan Wibberley, equity dealer at Investec Asset Management. "Headlines are supportive of markets."
At a two-day meeting in Brussels, Belgium, European Union leaders moved closer to solving the region's immediate crisis, dropping requirements that governments receive preferred creditor status on crisis loans to Spain's banks and relaxing conditions on potential help for Italy.
"At the summit, (German Chancellor Angela) Merkel agreed to let common sense prevail by not asking Italy and Spain to potentially kill their economies through an overdose of austerity," said Holger Schmieding, chief economist at London-based Berenberg Bank, in a note.
The rand gained as much as 2,7% against the dollar, and at 3.23pm was trading at R8,19/$, its strongest level since the middle of last month.
The JSE's all-share index gained as much as 1,7%, before reducing some of those gains to trade 1% higher.
Boosting the index was commodity stocks such as BHP Billiton and Anglo American, as metal prices increased on better sentiment over the global economy.
Gold rallied as much as 3,1% to $1600,60/oz and platinum jumped close to 3% to $1430/oz. The two metals provide a significant chunk of South Africa's export earnings.
Despite gold's up-tick, Edel Tully, global precious metals strategist at UBS, the investment bank, said the precious metal was still stuck in the same range as during the past couple of months.
"For now it's difficult to see this situation changing too dramatically," Ms Tully said. "Although gold has held the $1550/oz level on this occasion, that does not offer enough reassurance to rule out another leg down."