EMERGING MARKETS-Brazil stocks dip as Ukraine offsets Bradesco profit
RIO DE JANEIRO, April 24 (Reuters) - Brazilian stocks edged lower on Thursday as geopolitical tension in Ukraine offset a surge in banking shares, which followed Bradesco's higher-than-expected first-quarter profit. Investors' appetite for risk in emerging markets subsided as Russia launched army drills near the border of Ukraine after the killing of up to five pro-Moscow rebels by Ukrainian forces. Concern about an escalation of the Russia-Ukraine crisis put a lid on Brazil's benchmark Bovespa index, which dropped 0.2 percent, and the Brazilian real , which traded around Wednesday's close. "The situation in Ukraine continues to worry the market, and that is having an impact on overseas markets," said Marcos Trabbold, a currency trader at B&T brokerage in Sao Paulo. Still, shares of Banco Bradesco SA, Brazil's second-largest private-sector bank, climbed 1.8 percent after it posted an 18 percent increase in first quarter profit from a year ago, beating analysts' estimates. Shares of rival Itau-Unibanco Holding SA, which is also expected to post strong quarterly results next week, gained 1.4 percent, contributing the most to the rise of the Bovespa index. On the other hand, shares of Usiminas initially rose after the producer of steel products posted a sharply higher first-quarter profit, but erased gains in the afternoon as company executives forecast steel prices and sales will remain little changed in the next few months. Supporting the Brazilian real was a report by newspaper Valor Economico saying that President Dilma Rousseff plans to name central bank president Alexandre Tombini as finance minister in 2015, if she wins re-election. The change, which Valor says could even happen this year if Brazil's economic outlook deteriorates further, would be well received by investors who say incumbent Finance Minister Guido Mantega has lost much of his credibility by resorting to accounting tricks to meet fiscal targets. Rousseff is currently the favorite to win Brazil's presidential elections in October, according to recent opinion polls. "This would be very positive for both interest rates at the back end of the curve and for the Brazilian real," Dirk Willer, emerging market strategist with Citi, wrote in a research note. He added that Tombini has been making the case for tighter fiscal policy in Brazil. "Of course, it will take some time to figure out if President Dilma would indeed allow such a fiscal tightening." Mexico's stocks and currency fell slightly after data showed retail sales slid for a third consecutive month in February, pointing to flagging consumer-driven growth in Latin America's second-largest economy. The Mexican peso weakened 0.2 percent, also hurt by expectations that the central bank will leave interest rates on hold this year, even as U.S. Treasuries yields rise, because local inflation eased more than expected in early April. Key Latin American stock indexes and currencies at 1800 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1003.54 -0.02 0.11 MSCI LatAm 3246.84 0.39 1.04 Brazil Bovespa 51447.89 -0.24 -0.12 Mexico IPC 40273.28 -0.06 -5.74 Chile IPSA 3861.51 -0.26 4.39 Chile IGPA 18996.77 -0.2 4.22 Argentina MerVal 6814.8 1.64 26.41 Colombia IGBC 13350.25 -1.45 2.13 Peru IGRA 15006.39 0.38 -4.74 Venezuela IBC 2393.34 3.3 -12.54 Currencies daily % YTD % change change Latest Brazil real 2.2236 0.07 5.99 Mexico peso 13.083 -0.18 -0.41 Chile peso 559.7 0.54 -6.00 Colombia peso 1936.5 -0.03 -0.23 Peru sol 2.791 -0.21 0.07 Argentina peso 8.0000 0.03 -18.84 (interbank) Argentina peso 10.67 -1.22 -6.28 (parallel) (Reporting by Walter Brandimarte, Priscila Jordao and Bruno Federowski; Editing by Nick Zieminski)
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