February 5, 2020 / 10:02 PM / 17 days ago

EMERGING MARKETS-Latam markets rise on China virus fight hopes and Brazil rate cuts

    * Risk appetite rises on coronavirus treatment hopes 
    * Brazil central bank delivers expected rate cut  
    * Chilean peso firms as copper jumps to one-week high 

 (New throughout, updates prices, market activity and comments)
    By Sruthi Shankar
    Feb 5 (Reuters) - Latin American currencies and stocks rose
on Wednesday for a third session, as appetite grew for riskier
assets on reports of progress on the battle against China's
coronavirus, and as Brazil's central bank lowered its benchmark
interest rate.  
    A Chinese university team said it found a drug to treat
people infected with the virus while UK researchers claimed a
"significant breakthrough" in the search for a vaccine.

    Beijing took measures this week to boot liquidity in its
economy and markets. The fast-spreading outbreak has killed
nearly 500 people and disrupted businesses and travel globally.

    The Chilean peso rose, up off a two-month low hit
last week on concerns about China's demand for top export
copper. The Mexican peso gained 0.4%.
    "I would say from EM FX perspective, the response has been
very uneven," said Ed Al-Hussainy, senior currency and rates
analyst at Columbia Threadneedle.
    "Usually when you see a global growth shock, we see
significant correction in currencies like the Mexican peso and
the Indian rupee. We didn't see it. It really speaks to this
immense pressure in investors to reach for high-yielding
assets." 
    The Brazilian real edged up 0.4% after the central
bank cut its benchmark interest rate 25 basis points to a
record-low 4.25%, the fifth straight cut but smallest of the
rate-cutting cycle.
    The central bank has made four deep rate cuts since the
second half of 2019.
    A Reuters poll showed the real is forecast at 4.17 per
dollar in one month. On Friday the currency was at 4.2862 per
dollar, the weakest point on record.
    Sao Paolo stocks rose 0.4%, with help from a 4% jump
in lender Banco Bradesco SA on a better-than-expected
outlook for 2020.
    The broader Latin American equities index
jumped to a one-week high along with global stock market gains.

    In Argentina, data showed industrial output rose 1.2% in
December, its first rise in 20 months. Separately,
Economy Minister Martin Guzmanon told the International Monetary
Fund Buenos Aires cannot continue servicing unsustainable debt,
as the IMF encouraged restructuring policies.
    Argentina is fighting a steep recession and needs to
restructure $100 billion in sovereign debt with creditors,
including the IMF.
    
    Key Latin American stock indexes and currencies at 2125 GMT:
    
        Stock indexes                  Latest       Daily %
                                                    change
 MSCI Emerging Markets                   1089.40         0.37
 MSCI LatAm                              2828.21        -0.01
 Brazil Bovespa                        116028.27         0.41
 Mexico IPC                             44817.67        -0.51
 Chile IPSA                              4675.28         0.13
 Argentina MerVal                       40767.10        -0.65
 Colombia COLCAP                         1656.30         0.75
                                                             
           Currencies                  Latest       Daily %
                                                    change
 Brazil real                              4.2353         0.45
 Mexico peso                             18.5927         0.35
 Chile peso                                  778         0.42
 Colombia peso                            3362.8        -0.08
 Peru sol                                  3.361         0.03
 Argentina peso (interbank)              60.5875         0.00
                                                  
 
 (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru;
Editing by Bernadette Baum and David Gregorio)
  
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