JOHANNESBURG: South Africa's rand hit its worst level in three-weeks on Tuesday, declining with investors' appetite to take up risk while Europe looks politically unstable. Soft domestic jobs numbers added to the beating as they pointed to an uncertain economic recovery.

Joblessness increased to 25.2 percent of the labour force in the first quarter of the year, rising back to the stubborn quarter mark after 23.9 percent unemployment in the fourth quarter.

The weak first quarter numbers dampened hopes that the economy was creating jobs, with the data pointing to a labour market not able to absorb new entrants quickly enough.

The rand weakened slightly after the data. It fell 1.8 percent to a 7.9380 against the dollar on the day, after managing to close at 7.80 in New York, supported by a hawkish central bank statement late on Monday evening.

"Politically there's still a lot of uncertainty in Europe. That is not instilling any confidence in the market. That's pushing the euro lower, and the rand has jumped on the bandwagon; foreigners are very risk averse at the moment," said Ion de Vleeschauwer, head dealer at Bidvest Bank.

The rand may weaken to 7.95 in the short term if sentiment remains negative, and if that falls it could test the psychologically big 8 rand level against the dollar.

Central bank Governor Gill Marcus said late on Monday the bank had had "fairly sizeable" activity in the forex market in line with their reserves accumulation programme.

However data from earlier in the session showed the bank's net gold foreign exchange reserves fell for the second month in April to $48.823 billion, dipping from March levels partly on a lower gold price.

"It shows that they're definitely not active in the market," Bidvest Bank's de Vleeschauwer said.

Government bonds fell with the rand, with yields up 6.5 basis points to 6.49 percent on the 2015 note and nine basis points to 8.24 percent on the 2026 issue.