August 21, 2012 / 7:52 AM / 5 years ago

S.Africa bonds rally as Lonmin fears subside

JOHANNESBURG, Aug 21 (Reuters) - South African government bonds and the rand strengthened on Tuesday as fears subsided the deadly violence that hit Lonmin's Marikana platinum mine could spread to other areas.

The rand was at 8.2619 to the dollar at 0742 GMT, up 0.9 percent from its close of 8.3350 in New York on Monday.

Government bonds continued Monday's rally as foreigners returned to the market after the killings at 44 people at the mine, including 34 who died in a hail if police gunfire that rekindled memories of apartheid-era violence.

The yield on the 2015 bond fell 8 basis points to 5.59 percent, while that on the 2026 paper declined 4 basis points to 7.58 percent.

On Tuesday, workers continued to trickle in to the Marikana mine as world No.3 platinum producer Lonmin said that firing striking miners who did not return to duty could trigger more violence.

"Yesterday, they realised it's not that widespread and it's probably particular to Lonmin," one bond trader said.

The rand is expected to remain range-bound ahead of euro zone debt talks later this week including the leaders Germany, France and Greece. Traders said the market would be looking for signs of further stimulus in a statement by U.S. Federal Reserve policy-makers.

"There is a chance that risky assets could come under pressure if the Fed does not (as we suspect) signal the need for another round of quantitative easing," Absa Capital said in a note to investors.

"Risky assets will also be hoping that some common ground can be reached on EU debt this week and on the possibility of more stimulus being deployed." (Reporting by Tosin Sulaiman; Editing by Jon Herskovitz)

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