* Rand rally halts after first Fed hike since 2006
* Yield on 2026 paper at its highest since Fed 2014
* Stocks rise to more than 1-week-high
* MTN up more than 6 pct (Updates with latest prices and analyst quotes)
JOHANNESBURG, Dec 17 (Reuters) - South African stocks rose to a more than one-week high on Thursday after the United States raised interest rates for the first time in nearly a decade, but a stronger dollar weighed on the battered rand.
Federal Reserve Chair Janet Yellen's assurances that further tightening would be gradual and dependent on inflation soothed markets after the Fed's first rate increase since 2006, which followed months of waiting and several false starts.
The benchmark Top-40 index rose 2.8 percent to 44,927.07 points, while the broader All-Share index also rose by the same margin to 49,706.29 points.
"Anticipation and waiting had worried the markets," said Momentum Wealth's senior portfolio manager Wayne McCurrie. "Now that is over and done with."
Africa's largest mobile operator MTN rose 6.31 percent to 138.20 rand after the group confirmed that is has paid $196 million in total for operating licences in Ghana and Ivory Coast.
The group also said on Thursday it will challenge in a Nigerian court a fine imposed by the west African nation's telecoms regulator, saying the watchdog had no legal grounds to order the penalty.
Among the top gainers were Standard Bank, which rose 5.68 percent to 115 rand and FirstRand was 2.74 percent up to 43.15 rand.
Leading the losers was AngloGold Ashanti which dropped by 4.68 percent to 99.90 rand.
On the forex market, the rand weakened against the dollar after the long-anticipated though modest increase in the federal fund rate also lifted the dollar to a two-week high against a basket of currencies.
By 1531 GMT the rand had weakened 2.04 percent to 15.2395 per dollar.
While markets had anticipated the 25 basis points rate hike by the U.S. Federal Reserve, the rand still suffered, put under pressure by Moody's negative credit ratings announcement.
"The dollar has now started to see renewed strength, which, combined with Moody's negative credit ratings announcement and lingering investor uncertainty in the wake of President Zuma's surprising cabinet reshuffle suggest that the rand is likely to remain on the back foot onto year end," said Barclays Africa's analyst Kate Rushton.
Moody's cut its outlook on South Africa to "negative" from "stable" late on Tuesday, citing structural challenges in the mining industry and increasing political pressures on the budget.
Government bonds firmed, with the yield on the benchmark paper due in 2026 shedding 27 basis points to 9.25 percent. as buying slowly returned after last week's aggressive sell-off. (Reporting by Nqobile Dludla and Thekiso Lefifi; Editing by Tom Heneghan)