South Africa's rand firmer on EM rally, retailers lift bourse

JOHANNESBURG (Reuters) - South Africa's rand firmed late on Thursday as improved global risk appetite helped shift focus away from the possibility of a credit downgrade, while stocks also rose as retailers reported robust sales. At 1530 GMT the rand gained 0.3 percent to 15.6260 per dollar in a mixed session that saw the unit rally to 15.4955 before easing back. Standard & Poor's, which has South Africa one step short of subinvestment grade, is due to deliver its highly anticipated credit rating decision on June 3 following a visit to the country last week. "The rand will probably be quite range bound until Friday next week when Standard and Poor's makes its decision," said fx trader at Capilis Assets Management Giacomo Bonavera. "You won't find a lot of people taking big positions in either direction." Fitch, also due to give its ratings decision next month, on Thursday warned South Africa to avoid populist measures in the run-up to local elections in August rating. Bonds were also firmer, with the benchmark paper due in 2026 cutting 5.5 basis points to 9.375 percent. "If it is a downgrade our yields will pop, and that provides plenty of opportunity for us when the rest of world is struggling for yield and we provide a good whack of it," bond trader at WWC Securities Dale Forssman said. On the bourse, stocks firmed after retailers Massmart and Foschini Group rose on higher sales and earnings. The benchmark Top-40 index climbed 0.23 percent to 47,835 points while the All-Share index rose 0.37 percent to 53,921 points. South African wholesale and retail group Massmart, which is a unit of Wal-Mart, gained 4.8 percent to 125 rand after it said sales increased 9 percent for the first 21 weeks of the financial year. [5N18N1D7] "Results in the retailers are boosting overall optimism," said Avior Capital Markets trader Rabi Thithi. Clothing retailer The Foschini Group closed 2.3 percent higher at 142.20 rand after reporting an 18 percent jump in full year profit. Trading was below average, with a total of 236 million shares changing hands compared with last year's daily average of 280 million. (Reporting by Tanisha Heiberg and Mfuneko Toyana; Editing by Joe Brock)