EMERGING MARKETS-Latam currencies strengthen, Brazil stocks rise after Lula detention
(Updates to close, adds background) By Walker Simon and Bruno Federowski SAO PAULO, March 4 (Reuters) - Latin American currencies appreciated on Friday, buoyed by firmer oil and commodity prices, strong U.S. jobs growth and intensifying corruption investigations in Brazil. All the region's major currencies firmed, with those of Brazil, Chile and Colombia finishing up at least 1 percent. In the United States, nonfarm payroll data published on Friday beat forecasts, while oil prices touched two-month highs, and were on track for a 10 percent gain this week. Brazil's benchmark stock index rose more than 4 percent after police detained former President Luiz Inacio Lula da Silva for questioning on Friday in an investigation of a bribery and money laundering scheme. Police said they had evidence that Lula received illicit benefits from kickbacks at state-controlled oil company Petrobras in the form of payments and luxury real estate. The evidence against Lula also brings the operation closer to his protegee and successor, President Dilma Rousseff, who is fighting off impeachment and struggling to pull the country out of its worst economic downturn in decades. "Maybe this is helping Brazilian assets because of the idea that it will speed up the impeachment process (of Rousseff)," said Guillaume Tresca, an emerging markets senior strategist at Credit Agricole in Paris. "That is a very long process, but it could trigger political change, and that is the only hope right now." Analysts from political risk consultancy Eurasia Group said the news made it more likely than not that Rousseff would not finish her term. For months, Brazilian assets have often rallied when prospects of a change in government appeared to increase. Businesses had decried Rousseff's intervention in the economy, but since her second term began in January, she has rolled back some of the earlier initiatives. Lula's detention is part of a sweeping two-year investigation that has ensnared powerful lawmakers and business executives and was sparked by probes into kickbacks to politicians from Petroleo Brasileiro SA, as Petrobras is formally called. In international markets, the cost of insuring the country's debt fell to a three-month low, and bonds rallied. Indications that the central bank could ease its support for the real drove the Brazilian currency off its session high of 3.65 per U.S. dollar. The bank sold only 8,000 of the 9,600 currency swaps it has been offering daily, a sign that it could allow about 15 percent of the $10 billion in contracts maturing in April to expire. It has fully rolled over every maturity since August. "We view this as an important signal by (the central bank) as it shows that the monetary authority might not allow a sharp nominal appreciation of the (real) beyond about 3.70," BNP Paribas strategists wrote in a client note. Key Latin American stock indexes and currencies at 2055 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 792.65 1.6 -1.76 MSCI LatAm 2,033.74 3.67 7.21 Brazil Bovespa 49,144.81 4.13 13.37 Mexico IPC 44,843.04 0.23 4.34 Chile IPSA 3,838.39 0.55 4.30 Chile IGPA 18,796.55 0.47 3.55 Argentina MerVal 13,269.27 -0.43 13.65 Colombia IGBC 9,564.65 -0.16 11.90 Venezuela IBC 16,318.24 0.31 11.86 Currencies Latest Daily YTD pct pct change change Brazil real 3.7597 1.10 4.98 Mexico peso 17.7900 0.71 -3.15 Chile peso 680.2 1.00 4.34 Colombia peso 3,152.79 1.28 0.52 Peru sol 3.4561 0.17 -1.22 Argentina peso (interbank) 15.2000 0.33 -14.59 Argentina peso (parallel) 15.67 0.26 -8.93 (Reporting by Walker Simon and Bruno Federowski; additional reporting by Nelson Bocanegra and Christine Murray; Editing by Richard Chang)
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