JOHANNESBURG (Reuters) - South Africa's rand and government bonds added to recent gains on Friday, but local stocks notched up a fourth straight day of losses, tracking global market sentiment.

The blue-chip Top-40 index dropped as much as one percent during the session, and closed 0.79 percent lower at 26,519.15 points. The broader All-share fell 0.77 percent to 28,172.28 points.

"It's just negative market sentiment and it's a global phenomenon that's driving our market in this point in time," Abri du Plessis, chief investment officer at Gryphon Asset Management said.

Construction group Aveng, took the biggest knock on the bourse, shedding 5.35 percent to 53.65 rand.

Bourse heavyweight BHP Billiton was 1.37 percent up to 267.91 rand, while rival miner Anglo American fell 3.16 percent to 482.26 rand.

But the rand continued its recovery of the past month, while bonds added to a rebound in July.

The local currency was trading at 7.74 against the dollar at 1530 GMT, 0.2 percent stronger than its previous close in New York, after touching a new one-month high of 7.70 during the session. It was steady against the euro at 12.15.

The rand has bounced back strongly from a three-month low of 8.1795 to the dollar touched on June 13, benefitting from the lure of South Africa's high interest rates.

Dealers said trade was relatively quiet due to a holiday in the United States, but there was a steady order-driven demand for dollars.

"It has been quiet, relatively speaking, but there does seem to be some FX flows which could be related to the MTN deal. Big investment houses have been selling dollar-rand," ABN-AMRO trader Paul Peter said.

The currency appeared to have found a base at 7.70 but a push through that level could open up further strength.

"It is order-driven at the moment, it is not following the weaker equities (and) weaker gold price," he said.

BONDS RALLY

Africa's biggest mobile operator MTN is in talks with India's Reliance Communications on a possible tie-up with a 45-day exclusivity period ending early next week, raising speculation of an imminent announcement.

Government bonds rallied for the third day in a row, following the rand and with some traders suggesting investors may be re-arranging portfolios away from falling equities.

The yield, which moves inversely to the price, on the benchmark 2015 bond fell 9 basis points to 10.50 percent, while the 2036 yield dropped 12.5 basis points to 9.975 percent compared to Thursday's close.

The two-year bond was 6 basis points lower at 11.56 percent.

The 2015 bond yield is down 35 basis points since hitting a 5-1/2 year high on Tuesday.

On the bourse, the platinum index fell 3.03 percent to 112.58 points. Impala Platinum Holdings Ltd lost 3.72 percent to 258.50 rand and Lonmin was down 0.56 percent to 427.60 rand.

Gold was steady after falling 1 percent on Thursday as the dollar held onto the last session's gains against the euro and as oil prices eased.

Gold Fields Ltd lost 2.91 percent to 91.26 rand and

Harmony Gold fell 2.91 percent to 91.26 rand.

South Africa's biggest black-owned mining group Exxaro Resources, starred on the bourse, jumping 3.72 percent to 126.60 rand, and clawing back some of the 9 percent it lost on Thursday.

MTN Group rose 0.83 percent to 121 rand, as the market anticipated some clarity on the talks with Reliance Communications