July 6, 2017 / 8:44 PM / a year ago

EMERGING MARKETS-Brazil markets dip, Mexican rate swap yields rise

 (Recasts with Mexican yields)
    MEXICO CITY, July 6 (Reuters) - Yields on Mexican interest
rate swaps rose on Thursday after minutes from the
central bank's last meeting suggested it may not be finished
hiking interest rates and could copy any further hikes by the
U.S. Federal Reserve.
    After Mexico's central bank raised its benchmark interest
rate last month for the seventh consecutive time, to a more than
eight-year high, the market has tilted toward bets that it is 
done hiking.
    Investors have begun to price in rate cuts as soon as next
May, but the minutes did not provide any clear sign that
policymakers were thinking about when they could begin to reduce
borrowing costs.
    Meanwhile, Brazil's stocks and currency slipped on lingering
concerns over a political crisis, but shares of power utilities
rallied due to a planned regulatory overhaul of the sector.
    Demand for Brazilian assets has fizzled in recent months as
traders fear a corruption scandal could delay implementation of
President Michel Temer's ambitious agenda, which is seen as
critical to fuel long-term economic growth.
    The Brazilian real dipped about 0.2 percent while
other Latin American currencies were mostly flat. The Colombian
peso, however, strengthened 0.3 percent, tracking rising
crude oil futures.
    Brazil's benchmark Bovespa stock index fell more
than 1 percent, weighed down by blue-chips such as lender Itaú
Unibanco Holding SA and beverage producer Ambev SA
. Shares of miner Vale SA also fell on 
lower iron ore prices.
    The index's losses were limited by a rally in shares of
power utilities after the government announced that plans to
overhaul power sector rules could lead to higher rates and lower
    Shares of state-controlled utility Centrais Elétricas
Brasileiras SA, or Eletrobras, which would benefit
directly from the revamp, soared nearly 10 percent.
    Key Latin American stock indexes and currencies at 1920 GMT:
 Stock indexes                  Latest       Daily     YTD
                                               pct     pct
                                            change  change
 MSCI Emerging Markets            1,006.38   -0.34   17.12
 MSCI LatAm                       2,536.65    -0.4    8.81
 Brazil Bovespa                  62,462.48    -1.1    3.71
 Mexico IPC                      50,020.86   -0.56    9.59
 Chile IPSA                       4,826.64   -0.45   16.27
 Chile IGPA                      24,148.25   -0.38   16.47
 Argentina MerVal                22,272.37   -0.72   31.65
 Colombia IGBC                   11,031.74    0.13    8.92
 Venezuela IBC                  123,749.70    0.08  290.31
 Currencies                         Latest   Daily     YTD
                                               pct     pct
                                            change  change
 Brazil real                        3.2980   -0.18   -1.48
 Mexico peso                       18.2900    0.07   13.42
 Chile peso                          665.5    0.03    0.78
 Colombia peso                    3,095.25   -0.40   -3.03
 Peru sol                            3.253    0.12    4.95
 Argentina peso (interbank)        17.0700    0.47   -7.00
 Argentina peso (parallel)            17.2    0.06   -2.21

 (Reporting by Michael O'Boytle in Mexico City and Bruno
Federowski in Sao Paulo; Editing by Lisa Von Ahn and Dan
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