August 3, 2017 / 5:25 PM / a year ago

EMERGING MARKETS-Brazil stocks fall on profit-taking after recent rally

    By Bruno Federowski
    SAO PAULO, Aug 3 (Reuters) - Brazilian stocks slipped on
Thursday as traders booked profits from a recent rally, though
increased confidence in prospects for structural reforms helped
to curb losses.
    Brazil's benchmark Bovespa stock index fell 0.5
percent after closing above the 67,000 threshold on Wednesday
for the first time since mid-May.
    The move came after the lower house of Congress voted to
reject a corruption charge against President Michel Temer,
saving him from facing a possible Supreme Court trial that could
have ousted him from office.
    Analysts at political risk consultancy Eurasia Group
increased the probability they attribute to Temer finishing his
term to 70 percent from 60 percent, giving additional impetus to
his efforts to streamline Brazil's social security system.
    Still, his support was less than hoped for, raising
questions about how he will fare in future Congressional votes
on more charges likely to be lodged against him.
    "Many pundits have been arguing that reforms would be held
hostage until all potential charges... are voted by the lower
house. In other words, nothing will get done until the second
set of charges is voted," they wrote.
    "That view will probably prove to be overly pessimistic."
    Shares of Suzano Papel e Celulose SA fell 1.3
percent after jumping 11 percent over the previous two trading
days. The wood pulpmaker late on Wednesday reported a 79 percent
drop in second-quarter net profit, though analysts saw a solid
operating result.
    The Brazilian real seesawed, tracking other Latin
American currencies as traders awaited the release of key U.S.
jobs figures on Friday that could provide further hints over the
Federal Reserve's plan to cut policy stimulus.
    A Reuters poll showed the Brazilian real and the Mexican
peso are likely to weaken less than previously thought, as low
interest rates in the United States and the euro zone support
demand for high-yielding assets.
    On Thursday, the Mexican peso slipped 0.2 percent,
with traders sticking to caution despite a Fitch Ratings
decision to revise the outlook on Mexico's sovereign rating to
"stable" from "negative."
    Key Latin American stock indexes and currencies at 1700 GMT:
 Stock indexes                                daily %   YTD %
                                     Latest    change  change
 MSCI Emerging Markets               1063.79    -0.58   24.09
 MSCI LatAm                          2780.33        0   18.79
 Brazil Bovespa                     66774.33    -0.54   10.87
 Mexico S&P/BVM IPC                 51241.09     0.08   12.27
 Chile IPSA                          5071.38    -0.51   22.16
 Chile IGPA                         25327.97    -0.48   22.16
 Argentina MerVal                   21835.39     0.17   29.07
 Colombia IGBC                      10947.54    -0.12    8.09
 Venezuela IBC                     157390.94     7.16  396.42
 Currencies                                   daily %   YTD %
                                               change  change
 Brazil real                          3.1169     0.07    4.24
 Mexico peso                         17.8685    -0.22   16.09
 Chile peso                           648.95     0.36    3.35
 Colombia peso                       2952.33     0.30    1.67
 Peru sol                              3.238     0.03    5.44
 Argentina peso (interbank)          17.6550    -0.37  -10.08
 Argentina peso (parallel)             18.19     0.38   -7.53
 (Reporting by Bruno Federowski; Editing by Andrew Hay)
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