June 7, 2017 / 3:28 PM / in a year

EMERGING MARKETS-Brazil stocks, currency edge up as labor reform advances

    By Bruno Federowski
    SAO PAULO, June 7 (Reuters) - Brazilian stocks and
currencies on Wednesday advanced after a planned reform of labor
regulations cleared a hurdle in Congress, but uncertainty over
the outcome of an electoral court trial that could oust
President Michel Temer limited gains.
    Temer's proposal to loosen labor laws won approval from the
Senate's economic affairs committee on Tuesday, clearing the way
for a full-house vote and reducing expectations that a growing
political crisis could jeopardize his reforms agenda.

    The benchmark Bovespa stock index rose 0.5 percent,
driven higher by rising shares of banks such as Itaú Unibanco
Holding SA, Banco Bradesco SA and Banco do
Brasil SA.
    Still, the Brazilian real inched up only 0.2 percent
as the TSE, Brazil's top electoral court, argued whether Temer
received illegal campaign funding in 2014, when he ran for vice
president with his leftist predecessor, Dilma Rousseff.

    Temer's opponents see a ruling as a way out of the political
crisis set off by corruption allegations leveled against the
center-right leader, but a decision could take weeks, if not
months, and could be appealed by Temer. 
    Trading was muted in most Latin American markets ahead of
key events scheduled for Thursday, when Britain will hold a
national election, the U.S. Federal Bureau of Investigation's
former director will testify to Congress and European Central
Bank (ECB) policymakers meet to decide on policy.
    "Tomorrow may be the most important day of the quarter for
investors," analysts at Brown Brothers Harriman wrote in a note
to clients.
    Political noise has weighed on demand for risky assets in
recent days, with MSCI's emerging stock benchmark
slipping for a second day. Also contributing to caution were
decisions by several Arab countries to cut diplomatic ties with
Qatar, accusing it of supporting terrorism. Qatar vehemently
denies the allegations.
    Key Latin American stock indexes and currencies at 1510 GMT:
 Stock indexes                               daily %    YTD %
                                              change   change
 MSCI Emerging Markets              1014.90     -0.1    17.82
 MSCI LatAm                         2566.17     0.41     9.19
 Brazil Bovespa                    63263.73     0.49     5.04
 Mexico IPC                        49177.11    -0.08     7.74
 Chile IPSA                         4902.43    -0.19    18.09
 Chile IGPA                        24564.28    -0.17    18.47
 Argentina MerVal                  22368.92     0.05    32.22
 Colombia IGBC                     10765.24    -0.49     6.29
 Venezuela IBC                     83127.50     0.65   162.19
 Currencies                                  daily %    YTD %
                                              change   change
 Brazil real                         3.2696     0.20    -0.62
 Mexico peso                        18.1980     0.14    13.99
 Chile peso                          667.61     0.15     0.46
 Colombia peso                         2903    -0.29     3.39
 Peru sol                             3.262     0.12     4.66
 Argentina peso (interbank)         16.0100     0.03    -0.84
 Argentina peso (parallel)             16.3     0.49     3.19

 (Reporting by Bruno Federowski; Editing by Jonathan Oatis)
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