EMERGING MARKETS-Latin American stocks rise on Japan stimulus optimism
(Updates prices) By Bruno Federowski SAO PAULO, July 11 (Reuters) - Latin American stocks gained on Monday amid prospects of a fresh stimulus package in Japan, while the Brazilian real slipped after the central bank's currency intervention. Japanese Prime Minister Shinzo Abe said he ordered a new round of fiscal stimulus measures after his coalition emerged victorious from parliamentary elections, steering investors toward higher-risk assets. 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 more than 2 percent to its highest in 2-1/2 months, while emerging market 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. Chatellier said he upped his recommendation on emerging market sovereign debt to "neutral," with big overweight positions in Colombia and Argentina. But the Brazilian real dropped 0.47 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 1.54 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. Key Latin American stock indexes and currencies at 2134 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 846.73 2.16 6.62 MSCI LatAm 2,297.68 1.69 25.57 Brazil Bovespa 53,960.11 1.54 24.48 Mexico IPC 46,177.61 0.95 7.45 Chile IPSA 4,034.24 0.23 9.62 Chile IGPA 19,944.27 0.23 9.88 Argentina MerVal 14,977.30 1.95 28.28 Colombia IGBC 9,682.69 0.73 13.28 Venezuela IBC 11,881.62 0.61 -18.55 Currencies Latest Daily YTD pct pct change change Brazil real 3.3085 -0.47 19.299 Mexico peso 18.4725 0.17 -6.73 Chile peso 660.7 -0.18 7.42 Colombia peso 2,935.35 -0.10 7.97 Peru sol 3.28 0.06 4.09 Argentina peso (interbank) 14.6375 0.60 -11.31 Argentina peso (parallel) 14.98 -0.53 -4.74 (Reporting by Bruno Federowski; additional reporting by Sujata Rao, Paula Arend Laier and Miguel Angel Gutierrez; editing by Tom Brown and G Crosse)
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