EMERGING MARKETS-Brazil markets rebound after election selloff
(Updates prices to close, adds quote and table, Chile peso) SAO PAULO, Oct 28 (Reuters) - Brazil's currency and stock markets closed higher on Tuesday as bargain hunters stepped in after a sharp selloff sparked by the re-election of President Dilma Rousseff. Other Latin American stocks and currencies were mostly stronger after mixed U.S. economic data fed hopes that interest rates in the world's largest economy would be raised later than expected. Rousseff's victory over market-friendly challenger Aecio Neves on Sunday led Brazil's real to close at a 9-1/2-year low on Monday. Local stocks also dropped, with preferred shares of heavyweight state-run oil firm Petrobras posting their biggest one-day decline in nearly six years. Some investors saw those losses as overdone and took the opportunity on Tuesday to scoop up cheaper assets. The gains were also boosted by speculation that Rousseff would take a slightly more market-friendly stance in her second term. Brazil's Bovespa stock index closed 3.6 percent higher, with shares of state-run companies and banks posting the strongest gains. "The market is buying the initial indications of reforms in economic policy," said Joao Pedro Brugger, an analyst with Leme Investimentos in Florianopolis, Brazil. "Some of the names being floated around for the next finance minister are solid candidates that have the market's respect." Still, analysts warned that future price action will depend on whether Rousseff follows through on the hoped-for reforms. "At the moment nothing has really changed and the trend is for the Bovespa to fall," Brugger added. Yields on Brazilian interest rate futures <0#DIJ:> fell across the curve as some traders speculated that the central bank will be less aggressive in raising the benchmark Selic rate next year under Rousseff, even as inflation remains high. All 43 economists surveyed in a Reuters poll expect the central bank to keep its benchmark Selic rate unchanged at 11.00 percent at its next policy meeting on Wednesday, despite stubbornly high inflation. Most believe the bank will wait to see what new economic measures Rousseff will take before changing course on rates. "Given important economic demands and political pressures, there is growing hope that Ms. Rousseff's near-term policy stance may be slightly more market-friendly than initially anticipated," wrote Aryam Vazquez, senior economist with Oxford Economics, in a client note, adding that investors "may be slightly too pessimistic." The Brazilian real closed about 2 percent stronger at 2.47 per dollar. "Brazil has its own problems, but the dollar is weak globally today," said Eduardo Suarez, a senior currency strategist with Scotiabank. Other currencies in the region followed suit, with Chile's peso aided by a 0.9 percent rise in the price for copper , the country's main export. Key Latin American stocks and currencies at 1911 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 993.36 1.59 -2.48 MSCI LatAm 3052.87 3.96 -8.25 Brazil Bovespa 52335.57 3.63 1.61 Mexico IPC 44187.22 0.86 3.42 Chile IPSA 3790.07 -0.13 2.46 Chile IGPA 18635.43 -0.04 2.24 Argentina MerVal 10412.6 1.13 93.15 Colombia IGBC 13100.38 0.03 0.22 Peru IGRA 15973.86 0.59 1.40 Venezuela IBC 2842.34 0.3 3.86 Currencies daily % YTD % change change Latest Brazil real 2.4710 2.04 -4.62 Mexico peso 13.4607 0.59 -3.20 Chile peso 579 0.93 -9.14 Colombia peso 2056.2 0.57 -6.04 Peru sol 2.908 0.28 -3.95 Argentina peso 8.5000 0.00 -23.62 (interbank) Argentina peso 14.57 0.75 -31.37 (parallel) (Reporting by Asher Levine and Bruno Federowski; Editing by Meredith Mazzilli and Nick Zieminski)
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