(Adds latest prices, analyst comments)
JOHANNESBURG, April 29 (Reuters) - South Africa's rand weakened on Thursday as investors took profits on a brief rally spurred by the dovish tone of the U.S. Federal Reserve at its policy-setting meeting, reflecting cautious market sentiment towards the local currency.
At 1500 GMT the rand ZAR=D3 was 0.46% weaker at 14.3050 per dollar, having briefly touched 14.1475, its firmest in 16 months, before backtracking as better than expected economic data in United States dampened global risk-taking.
This week has seen volatile trade, but in a narrow range, with the rand failing to hold below the 14.20 technical resistance mark despite bull plays inspired by the high yield on offer in the face of loose Fed policy.
Fed Chairman Jerome Powell quashed speculation about an early tapering of asset buying, saying employment was still far short of target and that the central bank wants to keep monetary policy loose for the foreseeable future. the Fed fully supportive of the continuation of its monetary policy measures to promote economic recovery, while highlighting the risks to the downside, this is likely to continue to underpin commodity prices, and so lend support to the rand," said Annabel Bishop, chief economist at Investec.
Strong U.S. economic growth in the first quarter, with gross domestic product increasing at a 6.4%, took some of the steam out of the rand's rally, with traders warning that South Africa's own economic struggles may weigh on rand strength.
Shares on the Johannesburg Stock Exchange (JSE) made a surprise turn towards negative territory after opening and trading firm for most of the day, despite a strong set of earnings commentary from the United States on Thursday.
The benchmark all-share index .JALSH closed down 0.51%, halting its three-day upward move to 67,393 points and the blue-chip index of top 40 companies .JTOPI ended down 0.53% to 61,508 points.
"From the fall in the rand and the gold price, it looks like there was a sell-off in commodities as investors took profits," said Roy Topol, portfolio manager at Cratos.
He said the market also took a hit as shares of index heavyweights Naspers Ltd NPNJn.J and subsidiary Prosus (JO: PRXJn ) NV PRX.AS also posted losses on concerns of a tighter clamp-down on Chinese internet companies.
Naspers, through Prosus, holds a stake of more than 30% in Chinese tech giant Tencent Holdings Ltd 0700.HK .
Naspers and Prosus fell by 1.34% and 1.81% respectively.
Bonds slipped, with the yield on the benchmark 2030 government issue ZAR2030= rising 4.5 basis points to 9.27%.
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