* Rand gains reflect dollar's global weakness
* Bonds edge up, yields dip lower
JOHANNESBURG, April 26 South Africa's rand clung
to 3-1/2 week highs against the dollar on Thursday and
government bonds edged firmer as prospects of interest rates
staying depressed in the United States boosted currencies that
offer higher yields.
Producer inflation data due out at 0930 GMT should do little
to alter the market view that domestic interest rates will stay
unchanged this year as economic growth prospects remain fairly
positive while the inflation outlook is largely benign.
By 0643 GMT the rand traded 0.19 percent firmer at
7.7280 to the greenback compared with Wednesday's close at
7.7420. It briefly touched 7.7250 earlier on Thursday, its
strongest level since April 4, according to Reuters' data.
The dollar/rand moves mainly reflected overseas trends, with
the greenback on the ropes against major currencies after the
Federal Reserve signalled it would maintain a dovish policy
stance as the U.S. economy continues to struggle.
But persistent concerns about debt problems in the euro
zone, South Africa's main trading partner by region, could cap
any significant further rand gains.
"Simmering tensions in the euro zone are likely to come back
to haunt the euro, which we see weakening in the medium term,
dragging the rand down with it," Standard Bank strategist
Nomvuyo Guma said.
Government bonds edged up slightly in early trade, and
yields, which move inversely to the price, dipped.
The yields for the benchmark three-year and
14-year bonds each gave up a basis point to 6.485
percent and 8.205 percent respectively.
South African financial markets will be closed on Friday for
the Freedom Day holiday and trading will resume on Monday.
(Reporting by Stella Mapenzauswa, editing by Ed Stoddard)