EMERGING MARKETS-Brazil stocks rise as Petrobras cuts prices; rate futures fall
By Bruno Federowski SAO PAULO, Oct 14 (Reuters) - Brazilian stocks rose in early Friday trading after state-controlled oil company Petróleo Brasileiro SA announced a fuel price cut and a new pricing policy. Preferred shares in Petrobras, as the company is known, rose nearly 3 percent to the highest in two years, the biggest driver on the benchmark Bovespa stock index. Petrobras said it will reassess prices on a monthly basis to follow global markets more closely, without falling below international prices, turning the page on years of politically driven pricing that cost the company billions. Though lower short-term fuel prices tend to hurt revenue, increased transparency could help lure partners in refining projects, BTG Pactual said in a sales note. Yields paid on interest rates futures <0#2DIJ:> fell as the prospect of lower prices at the pump bolstered expectations of a rate cut next week. Rate futures priced a 65 percent chance of a 25 basis point cut and a 35 percent chance of a 50 basis point cut in the benchmark Selic rate. "If fuel prices continue to decline in coming months the central bank will have extra room to cut the Selic more aggressively in 2017," Goldman Sachs economist Alberto Ramos wrote in a client note. Other Latin American markets were slightly higher, with the Mexican and Chilean pesos strengthening about 0.2 percent. Demand for emerging market assets has been tepid in recent days as expectations grow that the Federal Reserve will raise interest rates in December. Key Latin American stock indexes and currencies at 1345 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 899.14 0.95 12.15 MSCI LatAm 2516.91 1.98 34.88 Brazil Bovespa 61957.99 1.37 42.93 Mexico IPC 47992.24 0.53 11.67 Chile IPSA 4139.70 0.35 12.49 Chile IGPA 20731.35 0.36 14.21 Colombia IGBC 9993.53 -0.07 16.92 Currencies daily % YTD % change change Latest Brazil real 3.1725 0.24 24.41 Mexico peso 18.8855 0.24 -8.77 Chile peso 670.2 0.15 5.89 Colombia peso 2912.34 0.13 8.82 Peru sol 3.399 0.18 0.44 Argentina peso (interbank) 15.1150 0.13 -14.11 Argentina peso (parallel) 15.5 0.19 -7.94 (Reporting by Bruno Federowski; Editing by Phil Berlowitz)
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