The rand was weaker in midday trade on Tuesday, in line with the softer euro, awaiting news from Europe, particularly Greece. 

In elections held over the weekend, Greece saw most votes going to the far right, which is opposed to austerity measures imposed on the country since its bailout. All eyes are now on Athens as negotiations are underway to form a coalition government. 

Traders noted that the European issue continued to dominate trade, with the local unit softening in line with the single currency. 

"The market has stalled, waiting for news from Europe," a local trader said. 

At 11:33 local time the rand was bid at R7.8544 to the dollar from its previous close of R7.7983. It was bid at R10.2164 to the euro from R10.1860 before, and at R12.6656 against sterling from R12.6332 previously. 

The euro was bid at US$1.3007, from its previous close of $1.3057 on Monday. 

Dow Jones Newswires reports that European stocks and the euro currency fell Tuesday on renewed concerns over a potential escalation of the euro zone sovereign debt crisis in coming weeks, as the political gridlock in Greece after the election places pressure on market confidence. 

Traders said the outcome of the French election was largely priced-in by markets, but pointed to renewed uncertainty following inconclusive weekend elections in Greece. 

Greece's first efforts to negotiate a cross-party coalition government stumbled Monday, after conservative leader Antonis Samaras failed to reach a deal with rival lawmakers. With chances for a coalition slim, the country may have to hold new elections soon. 

Morgan Stanley said, it isn't clear whether Greece will be able to form a stable government over the next ten days or whether it is headed for new elections in mid-June. 

"It may be difficult for whatever government emerges to implement the measures required by the Troika [the European Central Bank, the European Union and the International Monetary Fund] as a precondition for the disbursements of the next program tranches. Hence, the probability of a program derailing is on the rise and another default cannot be ruled out," said Morgan Stanley. 

As such, Europe seems to be moving quickly toward another escalation of the crisis, causing 'peripheral' euro zone government bond markets and risk assets to sell off again, said Morgan Stanley. "Alas the ECB's three-year longer term refinancing operations were only able to bring a brief respite from the crisis," said the bank. 

In currency markets, the euro was under pressure on Greek concerns. 

Back end of the curve under pressure

South African bonds were up to 8 basis points weaker in midday trade on Tuesday, after a mixed government bond auction. 

At 11:50, the benchmark R157 bond was trading at 6.480 percent from Monday's close of 6.415 percent. The R207 was bid at 7.595 percent and offered at 7.565 percent from a previous close of 7.500 percent and the R186 was trading at 8.190 percent from its close of 8.135 percent. 

The rand was weaker in midday trade on Tuesday, in line with the softer euro, awaiting news from Europe, particularly Greece. 

In elections held over the weekend, Greece saw most votes going to the far right, which is opposed to austerity measures imposed on the country since its bailout. All eyes are now on Athens as negotiations are underway to form a coalition government. 

Traders noted that the European issue continued to dominate trade, with the local unit softening in line with the single currency. 

"The market has stalled, waiting for news from Europe," a local trader said. 

At 11:33 local time the rand was bid at R7.8544 to the dollar from its previous close of R7.7983. It was bid at R10.2164 to the euro from R10.1860 before, and at R12.6656 against sterling from R12.6332 previously. 

The euro was bid at US$1.3007, from its previous close of $1.3057 on Monday. 

Dow Jones Newswires reports that European stocks and the euro currency fell Tuesday on renewed concerns over a potential escalation of the euro zone sovereign debt crisis in coming weeks, as the political gridlock in Greece after the election places pressure on market confidence. 

Traders said the outcome of the French election was largely priced-in by markets, but pointed to renewed uncertainty following inconclusive weekend elections in Greece. 

Greece's first efforts to negotiate a cross-party coalition government stumbled Monday, after conservative leader Antonis Samaras failed to reach a deal with rival lawmakers. With chances for a coalition slim, the country may have to hold new elections soon. 

Morgan Stanley said, it isn't clear whether Greece will be able to form a stable government over the next ten days or whether it is headed for new elections in mid-June. 

"It may be difficult for whatever government emerges to implement the measures required by the Troika [the European Central Bank, the European Union and the International Monetary Fund] as a precondition for the disbursements of the next program tranches. Hence, the probability of a program derailing is on the rise and another default cannot be ruled out," said Morgan Stanley. 

As such, Europe seems to be moving quickly toward another escalation of the crisis, causing 'peripheral' euro zone government bond markets and risk assets to sell off again, said Morgan Stanley. "Alas the ECB's three-year longer term refinancing operations were only able to bring a brief respite from the crisis," said the bank. 

In currency markets, the euro was under pressure on Greek concerns. 

Back end of the curve under pressure

South African bonds were up to 8 basis points weaker in midday trade on Tuesday, after a mixed government bond auction. 

At 11:50, the benchmark R157 bond was trading at 6.480 percent from Monday's close of 6.415 percent. The R207 was bid at 7.595 percent and offered at 7.565 percent from a previous close of 7.500 percent and the R186 was trading at 8.190 percent from its close of 8.135 percent.