EMERGING MARKETS-Emerging stocks, currencies up on Japanese stimulus
By Bruno Federowski SAO PAULO, July 11 (Reuters) - Emerging market stocks and currencies rose on Monday as prospects of fresh stimulus in Japan steered investors toward riskier assets. Japanese Prime Minister Shinzo Abe said he ordered a new round of fiscal stimulus after his coalition emerged victorious from parliamentary elections. His comments added to a bout of bullish sentiment triggered by stronger-than-expected U.S. jobs data published last Friday. MSCI's benchmark EM index climbed 2 percent to its highest in 2-1/2 months, while EM dollar bond yield spreads were at the tightest levels in almost a year . "This resilience of EM bonds can also be explained by the fact that the fixed income market is facing what has become a structural problem: the negative rates in Europe and Japan", Regis Chatellier, EM credit strategist at Societe Generale, told clients. "In this difficult environment, investors have to find a source of yield somewhere, and emerging markets clearly appear as a valid alternative for this". He said he upped his recommendation on EM sovereign debt to "neutral," with big overweight positions in Colombia and Argentina. The positive tone spilled into currency markets, with the Mexican and Chilean pesos strengthening about 0.2 percent. But the Brazilian real slipped 0.4 percent as the country's central bank once again intervened to weaken the currency after staying put on Friday. Brazil's benchmark Bovespa stock index rose 1.4 percent, supported by shares of state-controlled oil company Petróleo Brasileiro SA. Analysts at Itaú BBA improved its recommendation for Petrobras, as the company is known, to "outperform" and increased their price target to 14 reais from 9 reais. "Short- and medium-term challenges remain, but we believe they have already been mapped out by the market," Itaú BBA analyst Diego Mendes wrote in a report. Shares of education companies Estácio Participações SA and Kroton Educacional SA both rose after Estácio's board endorsed Kroton's takeover bid. Chile's stock market was nearly flat in morning trade, underperforming its peers. Cencosud fell 4 percent, the biggest loser in both benchmark indexes, after the retailer's owners said they would sell a 5 percent stake in the company. Key Latin American stock indexes and currencies at 1550 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 845.43 2 4.37 MSCI LatAm 2288.34 1.28 23.48 Brazil Bovespa 53873.77 1.38 24.28 Mexico IPC 46075.72 0.72 7.21 Chile IPSA 4029.31 0.11 9.49 Chile IGPA 19922.07 0.12 9.75 Argentina MerVal 15046.21 2.42 28.87 Colombia IGBC 9646.68 0.36 12.86 Venezuela IBC 11881.62 0.61 -18.55 Currencies daily % YTD % change change Latest Brazil real 3.3068 -0.42 19.36 Mexico peso 18.4900 0.07 -6.81 Chile peso 658.4 0.17 7.79 Colombia peso 2935 -0.21 7.98 Peru sol 3.279 0.09 4.12 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 Sujata Rao and Paula Arend Laier; Editing by Tom Brown)
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