File picture: Denis Farrell

Johannesburg - South Africa's rand softened on Monday as investors limited bets ahead of an expected interest rate hike by the central bank later in the week.

Stocks ended weaker on Monday, dragged down by the resources and platinum sectors as global equities buckled under pressure from falling oil prices.

By 16h00 GMT, the rand had slipped 0.3 percent to 16.4990 per dollar, erasing modest gains from earlier in the session that had seen the unit trade near a 1-1/2 week high.

The rand was unable to take advantage of a weaker greenback as caution towards emerging markets assets returned.

Sentiment toward the local currency was further hit by uncertainty over the likely size of an anticipated interest rate hike on Thursday when the South African Reserve Bank (SARB) concludes a three-day policy summit.

Nineteen of 31 economists said the central bank would raise interest rates by 50 basis points next Thursday to 6.75 percent while 11 said the Reserve Bank would raise by 25 basis points. Only one economist forecast rates unchanged.

“There are probably some speculators watching this and they might sell the rand on 25 basis points news,” said economist at Kadd Capital Elize Kruger.

“If the SARB doesn't hike now after hiking in November, that will really confuse the markets. When they hiked then, it was in a scenario where the rand was a lot stronger than it is now,” said Kruger.

Bonds tracked the currency weaker, with the benchmark government issue due in 2026 adding 2.5 basis points to 9.635 percent.

On the bourse, local stocks tracked European markets which lost some ground due the weakening oil prices as crude prices retreated from gains made in the previous week, said equities trader at Cratos Capital Greg Davies.

The blue chip top 40 index gave back 1.26 percent to 42,143 points while the broader All Share index slipped 0.95 percent at 47,210 points.

The biggest loser was resources company BHP Billiton, which fell 4.12 percent to 150.20. Mining company Anglo American fell 3.66 percent to R53.98, while Anglo American Platinum shed 2.9 percent to R186.49.

Telecoms led the bourse on the day, with mobile giants Vodacom and MTN up nearly 2 percent each, to R144.41 and R124.88 per share respectively.