EMERGING MARKETS-Yields on Brazil interest rate futures drop on inflation data
SAO PAULO, May 9 (Reuters) - Yields on Brazilian interest-rate futures dropped on Friday after weaker-than-expected inflation data upped expectations the central bank would pause its recent monetary tightening cycle. Latin American stocks edged slightly lower, while the region's currencies were mostly weaker against the dollar as profit-takers locked in recent gains. Brazil's benchmark IPCA consumer price index rose 6.28 percent in the 12 months through April, below the median 6.42 percent forecast in a Reuters poll, government statistics agency IBGE said on Friday. Yields on interest rate futures <0#2DIJ:> fell across the curve shortly after the data release. Brazil's central bank has signaled it wants to stop raising its benchmark rate this month following nine straight increases since April last year. "The central bank hadn't closed the door on another rate hike because it wanted to wait for the IPCA data," said Paulo Celso Nepomuceno, fixed income strategist at Coinvalores in Sao Paulo, adding that considering Friday's data, "the monetary tightening is over". In equity markets, the MSCI Latin American stock index fell slightly, with Mexico's IPC index and Chile's IPSA both down about 0.2 percent. Brazil's Bovespa stock index dropped about 0.3 percent despite an poll released on Friday that showed a one percentage point fall in voter support for President Dilma Rousseff. Brazilian stocks tend to rally when Rousseff, who is running for re-election in October, drops in the polls. Many investors have criticized her administration for its heavy-handed intervention in the private sector and are hopeful that a new administration will be more favorable to business, especially state-run companies. "It's the second poll in a week that shows (an election) runoff is becoming more probable. The news is positive but it doesn't offer anything new, and the market has risen a lot already on the back of polls," said Hersz Ferman, an economist at Elite Corretora in Rio de Janeiro. Latin American currencies were nearly all slightly weaker against the dollar as investors took profits following recent gains. Chile's peso crept higher for a fourth day, boosted by higher prices for copper, the country's main export. Key Latin American stock indexes and currencies at 1729 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1007.63 -0.12 0.61 MSCI LatAm 3339.38 -0.37 4.72 Brazil Bovespa 53255.8 -0.31 3.39 Mexico IPC 41578.98 -0.19 -2.69 Chile IPSA 3904.66 -0.16 5.55 Chile IGPA 19154.71 -0.15 5.09 Argentina MerVal 6825.64 0.16 26.61 Colombia IGBC 13544.39 -0.2 3.62 Peru IGRA 15839.44 -0.08 0.54 Venezuela IBC 2289.5 0.18 -16.34 Currencies daily % YTD % change change Latest Brazil real 2.2203 -0.29 6.15 Mexico peso 12.9625 -0.15 0.52 Chile peso 554.8 0.04 -5.17 Colombia peso 1902.44 -0.07 1.55 Peru sol 2.79 -0.43 0.11 Argentina peso (interbank) 8.0050 -0.03 -18.89 Argentina peso (parallel) 10.61 1.13 -5.75 (Reporting by Bruno Federowski and Priscila Jordao; Writing by Asher Levine; Editing by Peter Galloway)
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