EMERGING MARKETS-Colombian peso, Mexican stocks skyrocket on Fed, oil
(Updates prices, adds Mexico markets, trader quote) By Asher Levine and Jean Luis Arce SAO PAULO/MEXICO CITY, Dec 18 (Reuters) - Colombia's peso closed sharply stronger on Thursday while Mexican stocks posted their biggest gain in over four years as more stable oil prices and reassuring comments by the U.S. Federal Reserve stoked risk appetite. Other Latin American currencies also strengthened after the Fed offered an upbeat assessment of the U.S. economy on Wednesday, helping offset mounting concerns over the recent decline in oil prices and a potential financial crisis in Russia. Oil prices rebounded from five-year lows early in the session, though began to retreat in afternoon trading. That swing was not enough to dampen a rally in Colombia's peso, which posted its biggest gain in nearly four years, strengthening to 2,317 per dollar, a gain of around 3.4 percent from Wednesday's close. Fuel makes up about 69 percent of Colombia's merchandise exports, according to 2013 World Bank data. "This has to do with oil prices and the Fed, it's all helping reduce risk aversion," said Sebastián Díaz, an analyst with Banco de Bogotá. The Fed signaled on Wednesday that it would take a slow-going approach to rate hikes despite the strengthening U.S. economy, reducing concerns in Latin American markets over a sharper or sooner-than-expected interest rate rise. The Brazilian real strengthened for a second straight session, rising nearly 2 percent against the dollar after hitting its weakest level in nearly 10 years on Tuesday. Traders continued to cite risks, however, over the future of the Brazil central bank's currency intervention program, which is due to be modified in 2015. The bank has helped support the real by providing hedging protection to local businesses via currency swaps, though it remains unclear how the program will be scaled down next year. Equities markets moved higher, with the MSCI Latin American stock index up 2 percent. Mexico's IPC index was set to close with its biggest one-day gain in over four years as traders reacted to oil prices and the Fed. "We also saw some bargain-hunting at very good prices, which helped make the rebound a bit stronger here than in other markets," said Carlos Alonso, a trader at Interacciones in Mexico City. Key Latin American stock indexes and currencies at 1924 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 934.85 1.82 -8.43 MSCI LatAm 2666.15 2.08 -18.4 Brazil Bovespa 48495.7 -0.45 -5.85 Mexico IPC 42375.27 3.34 -0.82 Chile IPSA 3802.88 0.63 2.80 Chile IGPA 18673.86 0.71 2.45 Argentina MerVal 7932.99 -0.53 47.15 Colombia IGBC 11058.57 1.17 -15.40 Peru IGRA 14330.44 1.28 -9.03 Venezuela IBC 3941.39 0.02 44.03 Currencies daily % YTD % change change Latest Brazil real 2.6558 1.85 -11.26 Mexico peso 14.586 -0.12 -10.67 Chile peso 614.25 0.49 -14.35 Colombia peso 2317 3.52 -16.62 Peru sol 2.938 0.44 -4.94 Argentina peso 8.5500 0.06 -24.06 (interbank) Argentina peso 13.1 0.00 -23.66 (parallel) (Additional reporting by Nelson Bocanegra in Bogota; Editing by Leslie Adler)
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