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"Guys are still digesting the contents of the Budget - whether its bond friendly or not," a trader said.

At 11:50, the benchmark R157 bond was trading at 6.640%, from its previous close of 6.605%. The R207 was bid at 7.770% and offered at 7.740% from a previous close of 7.715% and the R186 was trading at 8.275% from its close of 8.235%.

The rand was bid at 7.6812 against the dollar from its previous close of 7.7226.

SA's producer price index (PPI) registered growth of 8.9% year on year (y/y) in January from 9.8% y/y in December and 10.1% y/y in November, Statistics SA (Stats SA) data released on Thursday showed.

The average annual change for 2011 was 8.4% compared with 6.0% in 2010.

The PPI, on a monthly basis, was 0.3% after decreasing slightly between November and December 2011.

The PPI was expected to clock in at 9.5% y/y in January, a survey by I-Net Bridge found.

Forecasts among five leading economists surveyed ranged from 8.8% y/y to 9.6% y/y.

Foreigners were net buyers of R2.178 billion of South African bonds including repo transactions on Wednesday after net purchases of R1.084 billion of local bonds on Tuesday, data released by the JSE shows.

Nominal cumulative volume was R80.775 billion on Wednesday from R204.873 billion on Tuesday.

Foreigners were net buyers of R2.179 billion of South African bonds excluding repo transactions on Wednesday after net purchases of R906.933 million of local bonds on Tuesday.

For the year to date foreigners have been net buyers of R12.184 billion of local bonds, excluding repo transactions. In 2011 they were net buyers of R47.359 billion worth of local bonds, excluding repo transactions.

In the year to date foreigners have been net buyers of R10.803 billion of local bonds including repo transactions. In 2011 they bought R37.501 billion of local bonds.