South African stocks fell on Monday, snapping a four-day advance, with paint company Freeworld Coatings sliding 4 percent after saying a proposed takeover bid by Japan's Kansai Paint was unfair to shareholders.
The rand recovered some of last week's losses against the dollar and traders predicted range trading for the currency ahead of an interest rate decision on Thursday.
Johannesburg's Top-40 blue chip index fell 1.14 percent to 28,893.16 points and the broader All-share index dipped 1.06 percent to 32,316.20 points.
We saw broad-based selling in reaction to a sharp fall in China stocks this morning after China raised banks' required reserves on Friday, one Johannesburg-based trader said.
Freeworld Coatings fell 4.26 percent to 11.01 rand after the company's negative comments on Kansai Paint's takeover bid, saying it could prevent a counter offer.
Swiss luxury goods company Richemont dropped 2.68 percent to 39.25 rand after the Geneva-based firm said the strong Swiss franc and higher year earlier comparative figures would weigh on its fourth quarter results.
Among gainers, Palaborwa Mining, which produces refined copper, rose 1.24 percent to 122.49 after saying fourth quarter copper output rose 7 percent. Kumba Iron Ore, boosted by an upbeat profit outlook, gained 0.5 percent to 452.25 rand.
At 1627 GMT the rand traded at 6.89 to the dollar, up 0.61 percent from Friday's close at 6.9326.
Markets have priced in the Reserve Bank keeping rates on hold on Thursday, with 21 out of 22 economists polled by Reuters expecting the repo rate to remain at 5.5 percent. Only one economist expected a 50 basis point reduction.
I think people will probably sit back until we have the interest rate announcement to really give us any direction. (Until then) we will continue to look at global markets, Bidvest Bank chief dealer Ion de Vleeschauwer said.
The commodities have come off quite a lot ... so that could put some pressure on the rand. But, ideally, we will probably be waiting for the monetary policy committee announcement to really give us insider information on whether (dollar/rand) will go above 7.00 or drop back down to 6.80.
Government bonds extended losses and yields were inversely higher.
The benchmark 2015 bond jumped 15 basis points to 7.68 percent compared with Friday's close, while that for the longer-dated 2026 note climbed to 8.66 percent from 8.51 percent.