(Adds latest prices, analyst comments)
JOHANNESBURG, Oct 20 (Reuters) - South Africa's rand firmed on Tuesday, building on recent gains as investor demand for high-yielding, riskier assets was spurred by signs the United States would conclude a new stimulus package.
At 1600 GMT, the rand ZAR=D3 was 0.27% firmer at 16.4750 per dollar compared with an opening level of 16.5375. Trade was subdued, reflecting the overall caution in markets ahead of U.S. elections in November and concerns about a resurgence of COVID-19 infections, especially in Europe.
The U.S. stimulus programme, which will add to the $3 trillion in coronavirus relief already approved this year, has been key to market sentiment. Democrats and Republicans were said to be close to agreeing a deal on Tuesday. no top-tier data due locally this week, and the medium term budget set for next Wednesday, the rand continued to be driven by global risk sentiment and investors search for high yields. Africa's currency and bonds offer some of the highest returns among emerging markets, and have remained attractive despite mounting fiscal risks, with the economy in a four-quarter recession.
"The South African currency continued to benefit from external factors, with attractive carry underpinning rand strength despite a brittle economic backdrop. Global risk appetite supported the local unit," said analysts at NKC African Economics.
In fixed income, the yield on the benchmark government bond due in 2030 ZAR2030= was flat at 9.3%.
Stocks rose slightly on hopes for the U.S. stimulus package.
The benchmark Top-40 index .JTOPI rose 0.22% to 50,852 points and the All-Share index .JALSH closed 0.2% higher at 55,272 points.
Shares in Pick n Pay PIKJ.J rose 2.17% to 52.66 rand after the supermarket chain declared a full-year dividend alongside an interim dividend. the decliners, the gold sector .JGLDX fell 2.03%, with Harmony Gold HARJ.J 1.97% weaker at 92.10 rand and AngloGold Ashanti ANGJ.J closing down 3.16% at 429.25 rand.