EMERGING MARKETS-Brazil stocks struggle to advance after recent surge
By Asher Levine SAO PAULO, April 14 (Reuters) - Brazilian stocks struggled to advance on Monday but remained close to recent highs, while the country's currency strengthened, outpacing its regional peers. Brazil's Bovespa index has gained about 15 percent since local stocks began rallying on March 17 and reached its most recent peak on April 8, driven by rising risk appetite among global investors and heightened expectations for a change in economic policy following October's presidential election. . On Monday, the Bovespa traded nearly unchanged, down 0.06 percent to 51,834 points, not far from its 4-1/2 month intraday high on April 8 of 53,393 points. The rally paused last week as investors took profits, with further gains limited by technical resistance near 52,200 points. The market tested that resistance level again early on Monday. "It's a normal case of the market settling," said Jose Faria de Azevedo, head of technical analysis at Rio de Janeiro brokerage Lopes Filho, who expects the index to hold onto most of its recent gains. "You have a different market now, a higher chance of seeing congestion at this level...but you have time to gain space for additional gains." Still, a technical indicator known as the relative strength index remained at 65 points on Monday, near the 70-point threshold that defines the market as "overbought," meaning investors may be tempted to lock in additional profits soon. Mexico's IPC stock index rose about 0.34 percent, making up for Friday's losses, while Chile's IPSA index edged 0.2 percent higher. In currency markets, Brazil's real firmed about 0.5 percent to 2.21 per U.S. dollar. The real strengthened past 2.20 per dollar early last week for the first time in over five months as global investors continued to pour money into Brazil in search of higher yields. While the central bank has carried out daily currency market interventions to smooth out volatility and the real has given back some of those gains, investors are testing the bank's willingness to counter a stronger real, which helps ease inflation pressure. A weekly central bank survey of economists released Monday forecast year-end inflation at 6.47 percent, a hair below the tolerance ceiling of the central bank's inflation target. Yields on Brazilian interest rate futures <0#2DIJ:> rose across the curve. "Once again, the inflation data suggest that the central bank will have few other options but to raise (interest rates) once again at its meeting at the end of May," wrote Andre Perfeito, chief economist with Gradual Investimentos in Sao Paulo. Higher interest rates tend to favor the strengthening of a currency, other factors being equal. Elsewhere in Latin America, the Chilean and Mexican pesos both weakened about 0.1 percent against the dollar, while Colombia's peso was nearly flat. Latin American currencies should see additional volatility this week, analysts said, as investors watch for key data releases from China and the United States and markets set to close for the Good Friday holiday. "What you expect is low liquidity in the market, which points to a lot of volatility in the first days of the week," said Juan Barco, an analyst with Helm Group in Bogotá. Key Latin American stock indexes and currencies at 1601 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1011.78 -0.36 1.27 MSCI LatAm 3292.73 -0.07 2.95 Brazil Bovespa 51834 -0.06 0.63 Mexico IPC 40519.27 0.34 -5.17 Chile IPSA 3876.77 0.22 4.80 Chile IGPA 18990.57 0.29 4.19 Argentina MerVal 6470.7 0.03 20.03 Colombia IGBC 13894.87 0.53 6.30 Peru IGRA 14778.97 0.61 -6.19 Venezuela IBC 2456.02 -1.95 -10.25 Currencies daily % YTD % change change Latest Brazil real 2.2096 0.48 6.66 Mexico peso 13.0503 -0.15 -0.16 Chile peso 549.4 -0.07 -4.24 Colombia peso 1926.09 0.05 0.31 Peru sol 2.782 0.00 0.40 Argentina peso (interbank) 8.0000 0.03 -18.84 Argentina peso (parallel) 10.33 0.77 -3.19 (Additional reporting by Nelson Bocanegra in Bogota Editing by W Simon)
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