October 31, 2016 / 1:32 PM / 2 years ago

EMERGING MARKETS-Brazil stocks rise on Itaú profit beat; real stronger

By Bruno Federowski
    SAO PAULO, Oct 31 (Reuters) - Brazilian stocks rose on
Monday after third-quarter profit at Itaú Unibanco Holding SA,
Latin America's largest bank by market value, came in well above
analysts' expectations.
    Preferred shares of Itaú Unibanco jumped as much
as 4.6 percent to a record high at 38.84 reais in early trading
after interest and fee income increased and provisions fell.
    Shares of planemaker Embraer SA were up for the
fifth straight day and near their highest in three months.
    The company posted a third-quarter net loss due to the cost
of staff cuts, used aircraft writedowns and a settlement with
the government over corruption charges. 
    Brazil's real currency strengthened 0.6 percent past
3.20 per U.S. dollar as traders braced for inflows on the last
day of a program granting amnesty to undeclared funds held
    Traders said the real should remain volatile throughout the
day as a central bank decision to allow about $3 billion in
currency swaps to mature offsets the effect of higher inflows.
    Brazil's central bank currently holds $29 billion worth of
currency swaps, which function like dollar sales to investors
for future delivery, on its books.
    The Mexican peso  also strengthened, though
trading was muted ahead of a U.S. Federal Reserve policy meeting
set for Tuesday and Wednesday.
    Most investors believe the Fed will keep interest rates
unchanged but offer additional hints over the possibility of a
December rate hike in its post-meeting statement.
    Key Latin American stock indexes and currencies at 1305 GMT:
 Stock indexes                              daily %    YTD %
                                             change   change
 MSCI Emerging Markets              904.42      0.1    13.77
 MSCI LatAm                        2600.97      0.1       42
 Brazil Bovespa                   64892.40     0.91    49.69
 Currencies                                 daily %    YTD %
                                             change   change
 Brazil real                        3.1793     0.49    24.15
 Mexico peso                       18.9130     0.30    -8.90
 Colombia peso                     2983.34     0.07     6.23
 Argentina peso (interbank)        15.1850    -0.07   -14.50
 Argentina peso (parallel)           15.52    -0.13    -8.05

 (Editing by Jeffrey Benkoe)
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