South Africa's rand ended the week with its biggest loss in a month on Friday but had bounced from two-week lows on hopes that European leaders were close to a deal that will recapitalise banks and stop the debt crisis from spreading.

As a heavily traded currency in global markets the rand has been at the mercy of shifting investor sentiment that has led to wide gyrations on the back of uncertainty about the outcome of the debt situation.

After starting on a weaker note, the rand recovered mid-session, climbing further from a two-week low of 8.27 hit Thursday.

By 1535 GMT, it was trading at 8.06 against the dollar, 1.13 percent firmer that Thursday's New York close of 8.1505.

The euro had a good day so we are seeing the rand coming back, said Ion de Vleeschauwer, chief dealer at Bidvest.

There's hope that this weekend's Europe meeting will bear some fruit so people are getting back into risky assets.

A weekly close below 8.00 will be a strong signal that the rand has shrugged off Thursday's weakness and could target 7.90 early next week, especially if the euro maintains its gains.

The rand lost has lost 3.5 percent so far this week, the first weekly loss in three weeks and the worst in a month.

IFR, a Reuters markets analysis service, said the weaker trend was still intact and the rand could break 8.3520 on the upside.

Government bonds ended slightly firmer on the day.

The long end of the curve came under a bit of pressure this week on expectations that Finance Minister Pravin Gordhan will announce wider fiscal deficits next week when he presents his three-year policy plan.

The yield spread between the 2015 and 2026 bonds is trading at record highs this week in anticipation of increased issuance at the longer end of the curve to make up for weak revenue.

The yield on the 2015 bond was down three basis points to 6.7 percent and that on the 2026 note slipped 0.5 basis points to 8.415 percent.