EMERGING MARKETS-Brazil stocks, currency extend rally as Lula charged
(New throughout, updates prices and market activity, adds other regional currencies) By Bruno Federowski SAO PAULO, March 10 (Reuters) - Brazil's stocks and currency rose on Thursday, extending a rally fueled by hopes of political change after prosecutors charged former President Luiz Inacio Lula da Silva in a money laundering investigation. Brazilian markets outperformed regional currencies, which mostly fell alongside oil prices and after the European Central Bank (ECB) signaled it was not likely to cut rates again. The Brazilian real revisited its six-month highs and strengthened for the seventh session in the last eight, closing up 1.5 percent. Trading was volatile, as some investors bet the central bank could see the recent rally as a cue to reduce its support for the currency. State investigators in Brazil suspect the family of Lula, who was detained for questioning by federal police last week, owned an undeclared beachfront apartment. Lula's support for current President Dilma Rousseff was widely seen as a key factor behind her re-election. Rousseff faces impeachment proceedings in Congress. Many traders believe the corruption probe could strengthen chances of her ouster and thus help the crisis-ridden country recoup its credibility. "Political issues are the main market driver and will remain so for a while," said Carlos Vieira, an economist with Lerosa brokerage in São Paulo. The benchmark Bovespa stock index shot up as high as 2.7 percent, close to seven-month highs, and shares of state-controlled oil company Petrobras, center of a wide-reaching graft scandal, rose as much as 3 percent in a volatile session marked by lower crude prices. Chile's peso briefly hit its highest in nearly five months after the ECB unleashed a bold easing package but then closed down 1.3 percent when the central bank said more rate cuts would only come in the most extreme of circumstances. The peso in Mexico also fell after skimming its highest point in three months. Key Latin American stock indexes and currencies at 2030 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 791.44 0.48 -0.81 MSCI LatAm 2066.27 1.66 11.08 Brazil Bovespa 49705.70 2.14 14.66 Mexico IPC 44367.45 -0.28 3.23 Chile IPSA 3834.24 0.57 4.19 Chile IGPA 18777.36 0.58 3.45 Argentina MerVal 13172.64 -0.72 12.83 Colombia IGBC 9574.67 -0.25 12.02 Venezuela IBC 16122.71 -1.08 10.52 Currencies daily % YTD % change change Latest Brazil real 3.6402 1.52 7.77 Mexico peso 17.8425 -0.46 -3.55 Chile peso 682.8 -1.13 3.79 Colombia peso 3221.1 -1.13 -1.64 Peru sol 3.4251 0.32 -0.33 Argentina peso (interbank) 15.3300 0.31 -18.08 Argentina peso (parallel) 15.66 0.38 -9.74 (Reporting by Bruno Federowski; Additional reporting by Paula Arend Laier and Anna Yukhananov; Editing by Alistair Bell and David Gregorio)
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