UPDATE 1-South African rand rallies to highest in more than 2 years, stocks hit new high

(Updates rand, bonds; adds stocks)

JOHANNESBURG, June 2 (Reuters) - The South African rand rallied to its highest in more than two years against the dollar on Wednesday, as investors cheered the latest evidence of a sustained rebound in global economies and as U.S. Treasury yields pulled back.

At 1525 GMT, the rand was 1.27% firmer at 13.5900 against the dollar, trading at its firmest since early February 2019.

With the local economy remaining weak and facing power cuts, the rand’s recent rally has been mainly on the back of global factors, including higher commodity prices which benefit resource-rich South Africa and expectations U.S. lending rates will stay lower for longer.

Riskier currencies, such as the rand, thrive on U.S. interest rates remaining low because they benefit from the interest rate differential that increases their appeal for carry trade.

Investors waited for crucial U.S. jobs data on Friday to assess what the increasing evidence of a faster-than-expected economic recovery would mean for central bank policy in the United States.

“This figure could also give markets some short-term guidance as to the economy in the U.S. which is likely to have a systemic effect across financial markets,” said DailyFX analyst Warren Venketas.

Stocks continued their upward movement with the main index racing past its all-time peak seen in early May to hit a record on Wednesday, as raging growth prospects in the U.S. boosted industrials and financial stocks.

The FTSE/JSE all-share index ended up 0.18% at 69,049 points. The blue-chip index of top 40 companies, often a gauge of the performance of the best of the listed companies, was up 0.14% at 62,787 points.

“Positive manufacturing data from the U.S. is making investors switch towards more of a risk-on sentiment and shows they are not much concerned about inflation,” said Thato Mashigo, Portfolio Manager at Sanlam Private Wealth, adding that this lends well to South African stocks.

He said favourable U.S. non-farm payroll data on Friday could be critical for a continued bull.

Bonds were a touch firmer, with the yield on the 2030 government issue down 1.5 basis points at 8.89%.

Reporting by Olivia Kumwenda-Mtambo and Promit Mukherjee; Editing by Nick Macfie