EMERGING MARKETS-Brazil stocks, currency rise on local politics, austerity measures
By Bruno Federowski SAO PAULO, May 24 (Reuters) - Brazil's stocks and currency rose on Tuesday after a minister accused of seeking to hamper a corruption probe stepped down, while traders cheered the announcement of austerity measures by interim President Michel Temer. Former Planning Minister Romero Juca's resignation on Monday was seen by traders as a swift response by Temer's center-right government to its first major scandal, which had helped drive Brazilian markets lower on Monday. Excerpts from a taped conversation had showed Juca agreed on the need for a "national pact" to limit the graft investigation, unleashing outrage two weeks after Temer took charge from leftist President Dilma Rousseff. Also helping brighten the mood was the announcement of measures including a proposed constitutional amendment that would automatically limit growth of public spending. Some investors remained cautious, however, arguing lawmaker support is far from guaranteed. "There will be lots of bickering," said José Carlos Amado, an FX trader with Spinelli brokerage in São Paulo. He added that markets will gauge Temer's standing in Congress later on Tuesday when lawmakers could vote on whether to allow a 170.5 billion reais ($66.9 billion) primary deficit this year. Shares of Petróleo Brasileiro SA rose 2 percent, boosting the benchmark Bovespa stock index. Stocks of Petrobras, as the state-controlled oil company is known, often track investors' mood towards the government. A drop in shares of state-controlled lender Banco do Brasil SA, however, limited gains for the benchmark index. Temer said he would consider closing a sovereign wealth fund which owns about 2 billion reais ($563 million) in Banco do Brasil equity, possibly selling the stock in financial markets to gather funds. The Brazilian real strengthened 0.8 percent, outperforming its peers in Latin America. Currencies such as the Mexican and Chilean pesos rose as an increase in commodity prices boosted the appetite for assets from exporters of basic products. Key Latin American stock indexes and currencies at 1605 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 788.66 -0.03 -0.66 MSCI LatAm 2073.39 0.51 12.73 Brazil Bovespa 49440.06 0.22 14.05 Mexico IPC 45377.08 0.31 5.58 Chile IPSA 3948.88 -0.01 7.30 Chile IGPA 19481.82 0.17 7.33 Argentina MerVal 12539.78 0.52 7.41 Colombia IGBC 9784.61 -0.4 14.48 Venezuela IBC 15236.19 -0.22 4.44 Currencies daily % YTD % change change Latest Brazil real 3.5502 0.85 11.18 Mexico peso 18.4540 0.35 -6.63 Chile peso 693 0.17 2.41 Colombia peso 3058.39 0.06 3.63 Peru sol 3.336 0.24 2.34 Argentina peso (interbank) 14.0250 -0.18 -7.43 Argentina peso (parallel) 14.59 0.55 -2.19 (Reporting by Bruno Federowski; Additional reporting by Paula Arend Laier; Editing by Chris Reese)
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