July 14, 2016 / 9:07 PM / 2 years ago

EMERGING MARKETS-Brazil currency, stocks rise on hopes of fiscal austerity

(Updates prices)
    By Bruno Federowski
    SAO PAULO, July 14 (Reuters) - Brazil's currency and stocks
gained on Thursday on hopes interim President Michel Temer will
manage to push through austerity measures following the election
of a right-leaning ally as speaker of the lower house of
    Rodrigo Maia of the Democrats party, known as DEM, handily
won a vote to replace speaker Eduardo Cunha who quit last week
as he faced expulsion from the legislature over ethics
    "Maia will likely fight by Temer's side in seeking to pass
fiscal measures in Congress," analysts with H.Commcor brokerage
wrote in a client note.
    Temer told reporters Maia's election on early Thursday
showed growing political harmony. 
    Analysts say that could grease the wheels for the approval
of a bill that limits public expenditure growth, which can help
curb inflation and reverse swelling budget deficits.
    Brazil's real currency rose 0.46 percent, while the
country's Bovespa benchmark stock index advanced 1.62
percent in its seventh straight day of gains.
    Among strong equities gainers were financial shares. Credit
Suisse analysts improved their recommendation for shares of
banks Bradesco SA and Itaú Unibanco SA to
"outperform" and "neutral", respectively.
    Shares of Usinas Siderúrgicas de Minas Gerais SA 
advanced 0.93 percent after sources told Reuters the steelmaker
is asking banks to extend a 120-day standstill agreement
covering 4 billion reais ($1.2 billion) in loans that expire
next week. 
    Other Latin American markets also rose after the Bank of
England signaled it could present a stimulus package in August,
though it surprised many investors by keeping interest rates on
    Mexico's IPC stock index ended the session up 0.49
percent, having touched a record high earlier in the day, and
the Mexican peso also appreciated.  
    Argentina's Merval benchmark stock index also hit a
fresh record high, while the Chilean peso strengthened
nearly 1 percent.

    Key Latin American stock indexes and currencies at 2023 GMT:
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets            866.27      1.16      7.83
 MSCI LatAm                      2362.82      2.48      26.6
 Brazil Bovespa                 55480.87      1.62     28.12
 Mexico IPC                     46498.51      0.49      8.19
 Chile IPSA                      4074.97      0.67     10.60
 Chile IGPA                     20120.39      0.58     10.74
 Argentina MerVal               15469.65      2.14     32.35
 Colombia IGBC                   9901.06      0.68     15.84
 Venezuela IBC                  11914.88     -1.45    -18.33
 Currencies                                daily %     YTD %
                                            change    change
 Brazil real                      3.2595      0.46     21.56
 Mexico peso                     18.3020      0.40     -6.07
 Chile peso                        650.8      0.87      9.05
 Colombia peso                      2916      0.79      8.69
 Peru sol                          3.279      0.03      4.12
 Argentina peso (interbank)      14.7100     -0.95    -11.74
 (Reporting by Bruno Federowski; Additional reporting by Paula
Arend Laier; Editing by W Simon and Jeffrey Hodgson)
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