EMERGING MARKETS-Brazil real rallies as traders cheer more ambitious fiscal target
By Bruno Federowski SAO PAULO, July 8 (Reuters) - The Brazilian real rallied on Friday as traders saw the government's more ambitious fiscal target for 2017 as a sign of interim President Michel Temer's commitment to austerity. Officials announced a primary deficit goal of 139 billion reais ($42 billion) for 2017, compared with this year's estimated gap of 170.5 billion reais. Concerns that Temer's administration could sacrifice fiscal austerity for support in a divided Congress had contributed to weakening the real for the five previous trading days. "The fiscal target represents a victory of the fiscal hawks inside the government, which is all the market wants to see," said Leme Investimentos partner Paulo Petrassi. The positive tone spilled into stock markets, with Brazil's benchmark Bovespa stock index rising for the third day in a row. Shares of Estácio Participações SA were up 3.1 percent, and Kroton Educacional SA advanced 3.6 percent. Estácio's board is scheduled to meet on Thursday to discuss a sweetened bid from Kroton, the world's largest education company by market value. The real advanced more than regional peers as Brazil's central bank refrained from intervening to weaken the currency after doing so for five straight sessions. Latin American currencies in general strengthened on Friday on a rebound in global risk appetite following stronger-than-expected U.S. jobs data. The figures are the latest sign of recovery in the world's biggest economy, but traders bet they will not be enough to drive the U.S. Federal Reserve to increase interest rates. Fed policymakers have repeatedly said they will look for clarity over the economic fallout from Britain's decision to leave the European Union before tightening policy. Key Latin American stock indexes and currencies at 1450 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 829.20 0.27 4.14 MSCI LatAm 2245.94 2.04 20.29 Brazil Bovespa 52832.53 1.57 21.87 Mexico IPC 45536.46 0.31 5.95 Chile IPSA 4008.55 0.27 8.92 Chile IGPA 19807.55 0.25 9.12 Argentina MerVal 14689.61 -0.01 25.82 Colombia IGBC 9686.91 0.24 13.33 Venezuela IBC 11707.92 -0.03 -19.74 Currencies daily % YTD % change change Latest Brazil real 3.3065 1.78 19.37 Mexico peso 18.6395 1.08 -7.56 Chile peso 662.3 0.53 7.16 Colombia peso 2966.97 0.55 6.82 Peru sol 3.277 0.15 4.18 Argentina peso (interbank) 14.7000 0.00 -11.68 Argentina peso (parallel) 14.85 0.40 -3.91 (Reporting by Bruno Federowski; Additional reporting by Paula Arend Laier; Editing by Lisa Von Ahn)
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