Investors have been favouring risky assets, encouraged by European authorities' efforts to resolve the debt crisis and better-than-expected growth in the US services sector.

Local stocks opened higher at 0700 GMT in line with a global advance in equities.

The JSE's Top-40 index was up 0.85 percent before the start of trade at 0700 GMT.

The rand was trading at 7.9740 to the dollar at 0655 GMT, not far from Wednesday's New York close of 7.97.

"The European authorities are getting together to sort out the banking space. That's given the market reason to rally and risk has been put back on table," said Alvin Chawasema, bonds dealer at Renaissance BJM.

"So rand is now below 8.0 and that's given bonds a bit of a boost as well."

Trading is likely to be volatile ahead of a European Central Bank policy decision later in the session. The ECB is expected to keep rates unchanged but there have been calls to cut rates to support the struggling euro zone economy.

ETM said in a note "technically and fundamentally, the argument for a rand recovery has now strengthened and the very fact that the dollar/rand broke back below the 8.00 handle yesterday speaks to this."

Government bonds extended a rally that started in the previous session after Deputy Finance Minister Nhlanhla Nene said the government would put a lid on spending once debt levels reached 40 percent of GDP.

The yield on the 2015 bond fell five basis points to 6.78 percent while that on the 2026 bond was 6.5 basis points down at 8.465 percent.