Graphic: renjith krishnan

South Africa's rand hit a two-week low on Friday, extending earlier falls linked to the killing by police of 34 protestors at a Lonmin mine as offshore investors increased bets on dollar gains after positive US data in the afternoon.

The rand was down just over 1 percent to 8.3150 to the dollar at 18:20 SA time.

The local unit was sold most of the session as investors gave South Africa a wide berth after the killings at the platinum mine rekindled memories of a racist past and hit sentiment towards Africa's largest economy.

In late afternoon trade the rand extended the losses to a two week low of 8.3533 as the euro dipped below $1.23 on improving US consumer sentiment.

“The combination of the euro remaining under pressure, the negativity surrounding commodity currencies across the board and the concerns regarding the ongoing strike action and clashes with police precipitated a bout of rand selling,” said William Van Rijn from Nedbank.

Further weakness is likely to drive the rand to test 8.50 support next week, some analysts said.

Government bonds were slightly weaker in thin trade for most of Friday's session.

The 2015 benchmark yield was steady at 5.7 percent while the longer 2026 nudged up to 7.665 percent, both yields coming back from weaker levels earlier in the session.

“We drifted higher through the day, literally keeping touch with the rand. But there's very very little interest and volumes have been light,” said a Johannesburg-based dealer.

The spread differential between the two benchmark short- and long-dated bonds has widened 7.5 basis points since an announcement on Thursday that government would inject extra long-maturity paper into the market next week.

Treasury is hoping to swap 2014 bonds into 2026 paper at a switching auction next Thursday. - Reuters