South African assets sink on risk aversion after Israel's strike on Iran

JOHANNESBURG, June 13 (Reuters) - South Africa's rand and government bonds fell steeply in early trade on Friday, after Israeli military strikes on Iran drove investors toward safe havens.

At 0657 GMT, the risk-sensitive rand traded at 18.04 against the dollar ZAR=D3, 1.6% weaker than Thursday's close.

The rand had been on a strong run for weeks, helped by local coalition partners resolving a budget dispute, talk of a lower inflation target and strong precious metal prices.

The escalation in hostilities in the Middle East - a major oil-producing region - adds a fresh layer of uncertainty for financial markets at a time of pressure on the global economy from U.S. President Donald Trump's erratic trade policies.

No major domestic data releases are due on Friday, but next week local consumer inflation ZACPIY=ECI and retail sales ZARET=ECI figures will be published.

The yield on South Africa's benchmark 2035 government bond ZAR2035= was up 16.5 basis points to 10.25%.