EMERGING MARKETS-Brazil stocks post best month in over two years
(Updates prices, adds quotes, context on rally) By Asher Levine SAO PAULO, March 31 (Reuters) - Brazilian stocks recorded their biggest monthly rise in more than two years in March, further boosted on Monday by comments from U.S. Federal Reserve chief Janet Yellen. The broader MSCI Latin American stock index touched its highest level this year, while most currencies across the region, with the exception of Brazil's real, strengthened against the dollar. Monday's rise in Brazil's Bovespa was the 10th in 11 days as the index closed above 50,000 points for the first time in nearly three months. Much of the Bovespa's recent gain has been attributed to the combination of rising risk appetite among global investors, optimism over a potential change in government after October's presidential election, and attractive valuations following a broad sell-off of emerging market assets earlier this year. "The market had fallen quite far because local pension funds were selling off equities in favor of bonds," said Pablo Stipanicic Spyer, a director at Mirae Asset Securities in Sao Paulo. "We then saw foreign investors start to come back in a case of 'buying the dips' with much of that money likely coming out of Russian assets." Spyer's comments were echoed by analysts at the annual meeting of the Inter-American Development Bank this weekend, who suggested Latin American economies would continue to receive short-term capital flows from investors fleeing Russia due to fear of geopolitical instability. Gains in the Bovespa may be limited, however, as a technical indicator known as the relative strength index showed Brazilian shares crossing into "overbought" territory for the first time since Sept. 2013. Monday's 1.3 percent gain was supported by signals from the Fed's Yellen, who said in a speech on Monday that an "extraordinary commitment" was still needed to support the U.S. economy. Local shares tend to rise on the outlook for continued monetary stimulus in the United States, which helps boost global liquidity and often supports demand for riskier assets. Mexico's IPC stock index rallied for a third session to touch its highest level since mid-February and close out its best month since Dec. 2012. The IPC had slumped to its lowest level in more than seven months in mid-March, but it rocketed back as global investors snapped up bargains around the globe in emerging markets that had been hammered in the first months of the year. The IPC rallied back nearly 7 percent from its low to close the month with a gain of 4.3 percent. The Mexican economy slowed to a 1.1 percent expansion last year, but data last week showed factory exports rose by the most in more than four years, which backed expectations that Latin America's No. 2 economy may be pulling out of a soft patch. Yellen's comments also supported gains in most local currencies, with the Mexican and Chilean pesos tracking slightly higher on the outlook for a weaker dollar. "Yellen said some things that were more 'dovish,' and that took a bit of pressure off the market in relation to (expectations for) higher interest rates in the United States," said Waldir Kiel, an economist at H.Commcor in Sao Paulo. Brazil's real was unable to hold onto gains, however, as traders remained skeptical that the central bank would allow the currency to appreciate much further after strengthening 3.31 percent against the dollar in March. Key Latin American stock indexes and currencies at 2031 GMT: Stock Latest daily % YTD % indexes change change MSCI Emerging Markets 994.65 0.99 -0.8 MSCI LatAm 3194.2 1.32 -0.21 Brazil Bovespa 50414.92 1.3 -2.12 Mexico IPC 40461.6 1.03 -5.30 Chile IPSA 3772.76 0.35 1.99 Chile IGPA 18552.57 0.3 1.79 Argentina MerVal 6373.82 2.82 18.23 Colombia IGBC 13827.01 1.11 5.78 Peru IGRA 14298.92 0.18 -9.23 Venezuela IBC 2523.11 0.06 -7.80 Currencies Latest daily % YTD % change change Brazil real 2.2635 0.17 4.12 Mexico peso 13.0487 0.16 -0.14 Chile peso 549.4 0.11 -4.24 Colombia peso 1971.37 -0.32 -2.00 Peru sol 2.808 0.00 -0.53 Argentina peso (interbank) 8.0000 0.03 -18.84 Argentina peso (parallel) 10.75 1.02 -6.98 (Additional reporting by Priscila Jordao and Bruno Federowski; Editing by Peter Galloway and Andrew Hay)
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