EMERGING MARKETS-Political hopes lift Peru, Brazil currencies to highest in months
By Bruno Federowski SAO PAULO, April 11 (Reuters) - The Peruvian and Brazilian currencies shot to their highest in months on Monday as traders hoped that political uncertainty in both countries could soon give way to a market-friendly policy agenda. The Peruvian sol jumped more than 2 percent to a six-month high as leftist presidential candidate Veronika Mendoza seemed set to miss out on a second-round vote. The country's select stock index headed for its biggest daily gain since 2008. Peru's stocks and currency had suffered in the run-up to the election as traders feared that Mendoza's rise in opinion polls could spell the demise of the free-market model pursued by Peruvian governments for a quarter century. Instead, conservative Keiko Fujimori will likely face off with investor darling Pedro Pablo Kuczynski, which should yield little surprising in terms of economic policy. "(The runoff) is widely regarded as the market's preferred outcome, with both candidates pledging to maintain pro-business policies, unlike Mendoza, whose populist rhetoric and recent surge in the polls had generated market anxiety," J.P. Morgan economist Franco Uccelli wrote in a client note. Meanwhile, the Brazilian real extended its rally for a second day to an eight-month peak before a congressional committee was set to vote on President Dilma Rousseff's impeachment after market close. A majority decision for the leftist President's ouster would pave the way for a vote on the House floor as soon as this week. Local media polls have generally shown increasing lawmaker support for an impeachment, boosting the country's stocks and currency. Many traders believe a change in government would lay the groundwork for an investment recovery in the recession-mired economy. "This week carries a promise of high stakes," said Correparti brokerage trader Ricardo Gomes da Silva. Shares of BM&FBovespa SA rose about 0.5 percent after it agreed to buy rival Cetip SA Mercados Organizados , creating Latin America's largest bourse with a market value of almost 12 billion reais ($3.4 billion). Deutsche Bank Securities analyst Tito Labarta lowered recommendation on BM&FBovespa shares to "hold", saying the acquisition makes "makes strategic sense, but outperformance limits upside." Key Latin American stock indexes and currencies at 1605 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 825.49 1.06 2.86 MSCI LatAm 2151.05 2.45 14.74 Brazil Bovespa 50629.95 0.67 16.79 Mexico IPC 44996.68 0.31 4.70 Chile IPSA 3919.78 -0.18 6.51 Chile IGPA 19226.41 -0.15 5.92 Argentina MerVal 12360.17 1.13 5.87 Colombia IGBC 9864.26 0.63 15.41 Venezuela IBC 15189.02 -0.08 4.12 Currencies daily % YTD % change change Latest Brazil real 3.5170 2.22 12.23 Mexico peso 17.6435 0.77 -2.34 Chile peso 680.5 0.34 4.29 Colombia peso 3060 1.12 3.57 Peru sol 3.2916 2.32 3.72 Argentina peso (interbank) 14.5100 -0.14 -10.53 Argentina peso (parallel) 14.87 0.27 -4.03 (Reporting by Bruno Federowski; Additional reporting by Paula Arend Laier; Editing by Daniel Flynn and Meredith Mazzilli)
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