(Updates with closing prices)
By Bruno Federowski
SAO PAULO, June 8 (Reuters) - Latin American stocks and currencies surged on Wednesday as stronger-than-expected Chinese trade data added fuel to a rally driven by shrinking expectations of near-term U.S. rate increases.
Imports by the world’s biggest consumer of commodities fell only 0.4 percent from a year earlier in May, the smallest decline since November 2014. Economists polled by Reuters had estimated a 6 percent drop.
The data lifted prices of basic products across the board, boosting demand for currencies from materials-heavy regions such as Latin America.
Crude futures rose, hitting 2016 highs, and stayed above the psychologically important $50 a barrel level on worries about sabotage of oil facilities in Nigeria.
Oil-heavy Colombia’s peso strengthened for a fifth consecutive day, reaching its highest levels in the last five weeks, while the Mexican peso advanced 1.31 percent.
Emerging market currencies have found support in weak U.S. data and comments by U.S. Federal Reserve Chair Janet Yellen that dashed bets on an interest rate hike as soon as this month. An increase in U.S. rates would draw some investors away from higher-yielding emerging market assets.
Brazil’s real currency jumped on Wednesday to its highest level since July 2015, past 3.40 to the greenback, surprising many traders who believed the central bank would not allow the currency to strengthen further.
Ilan Goldfajn, who was approved to become head of the country’s central bank on Tuesday, defended the floating exchange rate, triggering a rally in the Brazilian currency.
Expectations of capital inflows stemming from a $1.25 billion bond issue by Vale SA, the miner’s first international sale in over three years, also supported the real.
Ativa brokerage trader Arlindo Sá said the real could strengthen further if Brazil’s political crisis cools.
Scandals involving key officials in interim President Michel Temer’s administration have sparked concerns over his ability to pass tough austerity measures in Congress.
Brazil’s benchmark Bovespa stock index rose 2.26 percent, supported by shares of state-controlled oil company Petróleo Brasileiro SA. Shares in the company rose 8.93 percent.
Petrobras, as the company is known, has kicked off the sale of a network of liquefied natural gas terminals and thermal power plants as part of efforts by the firm to cut debt.
“This is another important step in the company’s deleveraging plans,” Guide Investimentos analysts wrote in a client note. (Reporting by Bruno Federowski; Editing by Dan Grebler and Andrew Hay)