South African stocks up as Old Mutual surges

JOHANNESBURG (Reuters) - South African stocks books their biggest gain in five weeks on Friday, rising over 1 percent as shares of insurer Old Mutual surged after posting higher earnings and dividend.

After two straight weeks of losses, when investors dumped shares on fears they had outpaced earnings potential, Johannesburg stocks now appear to making a modest recovery.

While charts suggest that stocks have room for further upside, some traders said the direction on Monday would likely be dictated by U.S. government budget cuts that were widely expected to start at end of the day.

"We have actually underperformed the global markets this week so there's an element of bargain hunting on some of these stocks," Andrew Bryson, a trader Nedbank Private Wealth said.

The benchmark Top 40 index added 1.13 percent to 35,653.81, bringing this week's gains to around 1 percent after logging a near 3 percent fall the week before. The broader All-share index ended 1.07 percent higher to 40,134.97.

Charts show the Top-40 has room for further upside because its slow stochastic, at about 35, is coming off oversold levels.

Analysts who use the slow stochastic consider the 80 and 20 mark to signal that an instrument is overbought and oversold, respectively.

Old Mutual surged 3.8 percent to 28.29 rand, booking its biggest one-day gain in 10 months after the insurer reported full-year profit that beat expectations on strong performance by its Nedbank unit and good growth in its emerging markets business.

It also hiked its dividend more than analysts expected.

Retailers, which were been under selling pressure in recent weeks on nagging concerns about valuations, recouped some of the losses.

Food and clothing retailer Woolworths added 2.95 percent to 66.55 rand and Truworths was 2.63 percent higher at 95.50 rand.

Gold miners fell as the price bullion extended a the decline to the second day that had seen the metal close February with its longest run of monthly losses in 16 years.

Gold Fields retreated 2.53 percent to 74.50 rand and AngloGold Ashanti lost 1.21 percent to 217.75 rand.

More than 200 million shares changed hands, according to preliminary bourse statistics, with advancers outpacing decliners 172 to 130 while 55 stocks were unchanged.

Source: http://news.yahoo.com/south-african-stocks-old-mutual-surges-161835018--finance.html

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