EMERGING MARKETS-Latam stocks extend rally as risk appetite grows
SAO PAULO, March 26 (Reuters) - Latin American stocks gained for an eighth consecutive session on Wednesday as hopes of stimulus measures in China and Europe coupled with better-than-forecast U.S. economic data supported investors' appetite for risk. But Brazil's real and Mexico's peso, the most-traded currencies in the region, halted their recent rally after hitting multimonth highs. MSCI's benchmark stock index for Latin America rose 0.4 percent in its eighth straight positive session. Brazil's benchmark Bovespa index also climbed 0.4 percent, leading regional gains. The Bovespa index has gained more than 8 percent since March 14, when it closed below 45,000 points for the first time in nearly five years. "We have heard that investors are reallocating in Brazil some of their positions in Russia and China," said Hersz Ferman, an economist with Elite brokerage in Sao Paulo, citing Russia's problems with Ukraine and China's weak economic data. "Global markets are more keen on risk assets," he added. Appetite for risk increased as investors looked past the Russia-Ukraine crisis to focus on U.S. data showing orders for manufactured goods rebounded in February while the services industry grew solidly in March. Expectations that China's central bank could unveil new stimulus measures to support the economy have also buoyed emerging markets over the past few days. In Latin America, equity gains in Brazil were driven by banking share price rises by Bradesco and Itau Unibanco. Meanwhile, shares of telecommunications firm Oi plunged nearly 10 percent after Brazil's securities watchdog said the company's controlling shareholders could vote on the terms of an upcoming merger with Portugal Telecom, rejecting objections from minority shareholders. In the foreign exchange market, the Chilean peso rallied 1 percent to its strongest level in a month, on hopes that China stimulus would boost the outlook for copper, Chile's main export. The Mexican peso was little changed, however, after a four-day rally drove it to a two-month high. The Brazilian real erased early gains, weakening 0.2 percent, after the central bank initially sold slightly more than half of the currency swaps it has been offering on a daily basis to support the exchange rate. The partial sale of swaps - derivatives that provide hedge against currency losses - raised speculation that policymakers could become less aggressive in their currency intervention as the real climbed to four-month highs. Shortly after the central bank's regular swap auction, in which it sold 2,400 of the 4,000 contracts offered, the bank conducted an additional auction in which it managed to sell the remaining 1,600 contracts. Still, many analysts interpreted the move as a sign that policymakers are not willing to let the currency gain past the key 2.3-per-dollar level. "The central bank is trying to defend that (2.3-per-dollar) level, but without fanfare," said an analyst with a foreign fund manager. Others were just confused about the central bank's strategy. "The central bank initially signaled the dollar couldn't fall to such a low level (against the real), but then it came back to the market and sold the remaining swaps. Everybody is trying to understand what that means," said Jaime Ferreira, a currency desk manager at Intercam, a brokerage in Sao Paulo. Key Latin American stock indexes and currencies at 1630 GMT: Stock indexes Latest Daily pct YTD pct change change MSCI Emerging 969.03 1.1 -4.41 Markets MSCI LatAm 3,052.53 0.42 -5.03 Brazil Bovespa 48,353.09 0.36 -6.12 Mexico IPC 39,811.7 0.05 -6.82 Chile IPSA 3,709.35 0.04 0.27 Chile IGPA 18,345.17 0.01 0.65 Argentina MerVal 6,168.11 -0.42 14.41 Colombia IGBC 13,399.19 0.03 2.51 Peru IGRA 14,189.75 0.39 -9.93 Venezuela IBC 2,501.19 7.24 -8.60 Currencies Latest Daily pct YTD pct change change Brazil real 2.3094 -0.18 2.05 Mexico peso 13.1215 -0.05 -0.70 Chile peso 553.6 1.01 -4.97 Colombia peso 1,971.09 0.35 -1.98 Peru sol 2.811 0.07 -0.64 Argentina peso 8.0025 0.06 -18.87 (interbank) Argentina peso 10.86 0.64 -7.92 (parallel)
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