JOHANNESBURG: South Africa's rand slipped to seven-week lows against the dollar on Monday, as prospects of a sharp escalation in the US-China trade war turned investors risk-averse.

Emerging market currencies also softened broadly, with MSCI's index of 25 currencies, which is heavily skewed towards Asian currencies such as South Korea's won, Taiwan's dollar and China's yuan, dropped 1.2%, the biggest daily decline since June 2016.

The fall came after Beijing vowed on Friday to retaliate against US President Donald Trump's decision to slap 10% tariffs on the remaining $300 billion of Chinese imports, a move that ended a month-long trade truce.

At 1517 GMT, the rand was 0.61% lower at 14.8800 per dollar, trading at its weakest levels since June 13.

"With little in the way of good news, we can expect the rand to try and test the R15.00 level with risk sentiment currently hugely in favour of safe-haven assets," Andre Botha, a Senior Dealer at TreasuryONE, said in a note.

In fixed income, the yield on the benchmark government bond due in 2026 added 7 basis points to 8.440%.

In the equities market, both major indexes were also hammered by fast receding risk appetite, with the Johannesburg All-Share index and Top-40 index weakening to more than two-month lows.

With the global fallout most evident in the Asia region, China's Tencent, in which Naspers holds a over 30% stake, fell 4.27%.

This resulted in the South African e-commerce giant Naspers weakening 4.58% to 3,350 rand.

"Global markets are rather ugly at the moment, which is not a great way to start the week," portfolio managers at Vestact said in a note.

The All-Share index closed 2.31% lower at 54,975 points, while the Top-40 index ended the day 2.52% down to 49,066 points, after both weakened to levels last seen on May 30.

Bucking the trend, the Gold index strengthened 6.67% as investors sought safe-haven assets. Gold Fields jumped 8.14% to 85.55 rand, Sibanye-Stillwater climbed 6.97% to 19.94 rand, while Harmony Gold rose 6.40% to 41.37 rand.