May 26, 2017 / 4:08 PM / in a year

EMERGING MARKETS-Brazil markets up as traders bet reforms still afoot

    By Bruno Federowski
    SAO PAULO, May 26 (Reuters) - Brazilian stocks and
currencies rose on Friday as traders hoped for progress on an
ambitious reform agenda despite a growing political crisis
ensnaring President Michel Temer.
    The Brazilian real strengthened 0.7 percent but
remained far from the two-month peaks seen before the political
scandal over bribery allegations broke out last week. 
    Brazil's benchmark Bovespa stock index rose 1.1
percent. Shares of state-controlled power utility Centrais
Elétricas Brasileiras SA, which ranked among the top
decliners in the recent selloff, were the biggest gainers.
    Efforts by Temer's administration to foster trust in plans
to streamline Brazil's pension system and reform labor laws have
seemed to bear fruit among investors. House Speaker Rodrigo Maia
has said he expects the lower house to vote on pension reform by
mid-June, clearing the way for a final Senate vote.
    That cautious optimism has rekindled bets that the central
bank would cut interest rates by a brisk 100 basis points next
week despite market volatility drive by political turmoil,
driving yields on rate futures lower.
    Also contributing to the drop were expectations of rapidly
slowing inflation after state-controlled oil company Petróleo
Brasileiro SA announced a cut on fuel late on
    Earlier on Thursday, emerging stocks inched to two-year
highs, supported by relatively dovish minutes from the last U.S.
Federal Reserve meeting. Still, disappointment over the scale of
oil supply cuts announced by OPEC have kept the MSCI emerging
equity index from adding significantly to gains.
    Key Latin American stock indexes and currencies at 1600 GMT:
 Stock indexes                             daily %    YTD %
                                 Latest     change   change
 MSCI Emerging Markets           1016.08      0.15    17.66
 MSCI LatAm                      2576.16      0.98     8.99
 Brazil Bovespa                 63930.45      1.11     6.15
 Mexico IPC                     49557.97       0.3     8.58
 Chile IPSA                      4880.06      0.16    17.55
 Chile IGPA                     24479.90      0.16    18.07
 Argentina MerVal               21919.18      1.08    29.56
 Colombia IGBC                  10732.49      0.03     5.97
 Venezuela IBC                  73816.38     -0.42   132.82
 Currencies                                daily %    YTD %
                                            change   change
 Brazil real                      3.2583      0.74    -0.28
 Mexico peso                     18.5120     -0.04    12.06
 Chile peso                        671.7     -0.47    -0.15
 Colombia peso                   2914.67      0.11     2.98
 Peru sol                          3.275     -0.21     4.24
 Argentina peso (interbank)      16.0200      0.48    -0.91
 Argentina peso (parallel)         16.27      0.12     3.38

 (Editing by Alistair Bell)
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