EMERGING MARKETS-Latam currencies up on Fed statement; Argentina bonds slide
(Updates with Fed statement, Argentina developments, new quote) SAO PAULO, June 18 (Reuters) - Latin American currencies strengthened on Wednesday while stocks rose after the U.S. Federal Reserve's policy statement upped investor expectations that monetary stimulus could remain accommodative for longer. Meanwhile, Argentina debt prices pared early losses after a lawyer representing the country said negotiations would be held between the South American nation and holdout creditors. The Federal Reserve on Wednesday hinted at a slightly faster pace of interest rates increases starting next year, but suggested rates in the long-run would be lower than it had indicated previously. The bank also slashed its forecast for U.S. economic growth this year. "A lower growth projection for 2014 could be a more dovish signal, removing some of the perception that the economy and inflation had already put the Fed on alert (for a sooner increase in interest rates)," said Jankiel Santos, chief economist with Espirito Santo Investment Bank in Sao Paulo. Stock markets rose across the region, with the MSCI Latin American stock index posting its biggest gain in nearly two weeks. Brazil's Bovespa index erased the previous two sessions' losses, driven by widely-traded shares such as oil producer Petroleo Brasileiro SA, known as Petrobras, and lender Itau Unibanco SA, both of which tend to track the outlook for global liquidity. While Argentine stocks also rose, its bonds fell after Economy Minister Axel Kicillof said on Tuesday the country is taking steps to swap bonds governed by U.S. law for those governed by Argentine law so they would not be subject to U.S. courts that have made paying existing bondholders more difficult. The move comes after the U.S. Supreme Court left intact lower court rulings ordering the country to pay holdout creditors who had declined to accept the government's settlement after a 2001 default. Bond prices pared losses later in the afternoon after a lawyer for the country said Argentine officials will begin to negotiate with the holdouts for the first time next week. Argentina's dollar-denominated 2017 Global bond pared early losses though it remained about 0.69 points lower to bid 81.70 with the yield at 16.89 percent, according to Thomson Reuters data. Its dollar-denominated discount bonds due in 2033 also pared losses, dropping 0.8 points in price to 72.63 cents to yield 12.42 percent. Key Latin American stock indexes and currencies at 1935 GMT: Stock indexes Latest daily % YTD % change change MSCI Emerging Markets 1047.16 0.35 4.07 MSCI LatAm 3416.83 2.06 4.6 Brazil Bovespa 55098.11 1.47 6.97 Mexico IPC 42773.16 0.38 0.11 Chile IPSA 3859.47 0.83 4.33 Chile IGPA 18843.9 0.62 3.38 Argentina MerVal 7735.55 3.04 43.49 Colombia IGBC 14223.88 -0.07 8.82 Peru IGRA 16392.49 0.41 4.06 Venezuela IBC 2154.35 -0.14 -21.28 Currencies Latest daily % YTD % change change Brazil real 2.2272 1.27 5.82 Mexico peso 12.972 1.14 0.45 Chile peso 558.2 0.27 -5.75 Colombia peso 1889 0.69 2.28 Peru sol 2.799 0.14 -0.21 Argentina peso (interbank) 8.1275 0.03 -20.12 Argentina peso (parallel) 12.2 0.41 -18.03 (Reporting by Asher Levine and Bruno Federowski; editing by G Crosse and Nick Zieminski)
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