South Africa's rand steadied against the dollar on Tuesday after falling more than 2.6 percent overnight, while bonds also recouped some losses although local assets remained vulnerable to renewed global risk aversion.

The yield on the benchmark four year bond briefly touched a session high of 6.7 percent, its strongest level since Aug 25, before coming back to 6.655 percent by 0650 GMT -- down 3.5 basis points on the day.

The yield for the heavily traded 2026 issue was down one basis point at 8.15 percent after scaling a 2-1/2-week high of 8.215 percent earlier.

A heavy sell-off of local debt on Monday, as worries Greece might default on its debt, triggered a flight to assets seen as safe havens and pushed yields up by as much as 30 basis points.

The meltdown also hit the rand, which turned out the worst performance among a basket of 20 emerging market currencies, hitting a near-five-week low of 7.4750.

It was however 0.36 percent firmer at 7.3785/dollar in early Tuesday trade.

The rand is taking a breather after a very tough day yesterday (but) is not out of the woods yet. European banks are under a lot of pressure. The euro is under pressure and the euro story continues to weigh heavily on risk sentiment in general, Absa Capital trader Duncan Howes said.

Local focus is also on the South African Reserve Bank's latest quarterly bulletin out at 0800 GMT, which will provide data on the current account.

Twelve economists polled by Reuters last week saw the deficit on the account widening to 3.5 percent of GDP in the second quarter from 3.1 percent the first, which would add pressure on the rand.

The futures market pointed to recovery for the bourse after Monday's slide, with the September futures contract up 1.89 percent ahead of the 0700 GMT start of trade.