October 27, 2016 / 2:42 PM / in 2 years

EMERGING MARKETS-Brazil stocks up on hopes of fiscal austerity

By Bruno Federowski
    SAO PAULO, Oct 27 (Reuters) - Brazilian stocks rose on
Thursday to nearly the highest level in four years on hopes that
President Michel Temer will manage to pass tough austerity
measures in Congress.
    Senate President Renan Calheiros said the upper house of
Congress is likely to vote a congressional amendment limiting
growth of public spending on Dec. 13.
    Many investors see the measure, which passed the lower house
of Congress this week, as essential to bring back confidence in
Latin America's largest economy amid tentative signs of recovery
from its deepest recession in decades.
    Financial stocks provided the biggest boost to the
index, with shares of Banco Bradesco SA nearing their
highest levels ever.
    Shares of miner Vale SA rose after it returned to
profit in the third quarter following a hefty loss a year
earlier, while shares of Natura SA slumped on
weaker-then-expected quarterly results. 
    The country's real currency was nearly flat but
traders said it could strengthen further due to inflows ahead of
the Oct. 31 deadline in a bill granting amnesty to non-declared
funds held abroad in exchange for a fine.
    The Mexican peso weakened 0.5 percent after opinion
polls showed slight gains for Republican presidential nominee
Donald Trump, though he still lagged Democratic rival Hillary
    Trump has pledged to curtail U.S. financial flows to Mexico,
weighing on the peso.
    "Two-way risks are high and asymmetric - a peso sell-off in
a Trump win is larger than a rally in a Clinton victory,"
Societe Generale strategists wrote in a report.
    Key Latin American stock indexes and currencies at 1420 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
 MSCI Emerging Markets                905.77    -0.53    14.66
 MSCI LatAm                          2612.54    -0.26    42.78
 Brazil Bovespa                    64.376.00     0.86    48.52
 Mexico IPC                         47805.44     -0.6    11.23
 Chile IPSA                          4295.29    -0.41    16.71
 Chile IGPA                         21439.19    -0.35    18.11
 Argentina MerVal                   18187.58     -1.2    55.78
 Colombia IGBC                      10052.17     0.13    17.61
 Venezuela IBC                      14057.36      0.8    -3.64
 Currencies                                   daily %    YTD %
                                               change   change
 Brazil real                          3.1426    -0.04    25.60
 Mexico peso                         18.7475    -0.29    -8.09
 Chile peso                            653.7     0.00     8.57
 Colombia peso                       2969.99    -0.07     6.71
 Peru sol                              3.369     0.00     1.34
 Argentina peso (interbank)          15.2000     0.25   -14.59
 Argentina peso (parallel)             15.53     0.52    -8.11

 (Reporting by Bruno Federowski; Editing by Meredith Mazzilli)
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