July 8, 2020 / 8:06 PM / a month ago

EMERGING MARKETS-Brazil's real leads FX gains on strong data

    * Chile's peso gains for third session
    * Brazil's real up after two days of declines 
    * MSCI Latam stocks index rises 

 (Adds comments, updates prices)
    By Ambar Warrick and Shreyashi Sanyal
    July 8 (Reuters) - Brazil's real rose on Wednesday after
better-than-expected economic data pointed to some recovery in
Latin America's largest economy, while regional stocks also
edged higher.
    The real added about 0.7% after data showed retail
sales in the country grew 13.9% in May from the prior month,
more than twice what was expected in a Reuters poll.

    The reading reflected a pickup in economic activity as the
country steadily relaxed coronavirus-related lockdowns. Still,
Brazil is the second-worst-stricken country in terms of the
number of coronavirus infections, behind only the United States.
    "We expect retail sales activity to have reached bottom in
April and to stage a gradual recovery in coming months in tandem
with the relaxation of social distancing protocols and other
measures to restrict movement and activity," Goldman Sachs
analysts wrote in a note.
    "However, a still very complex domestic COVID viral picture
could undermine/weaken the pace of the forecasted recovery." 
    
    Brazilian President Jair Bolsonaro said on Tuesday he has
tested positive for the virus, prompting some weakness in stocks
and the real. On Wednesday, stocks were up about 1.8%.
    "Even though the real was able to appreciate most recently
whenever general market sentiment lifted, a glance at the
options markets illustrates (that) investors see increased risks
in the real regardless of global developments," said Thu Lan
Nguyen, FX and emerging markets analyst at Commerzbank. 
    Chile's peso rose about 0.4%, extending gains into a
third straight session on continued support from copper prices.
    Concerns over copper supply from the world's top producer of
the metal have caused a large jump in prices. A perceived
recovery in Chinese demand has also helped.
    The country, long hailed as one of Latin America's most
stable economies, was struck by the pandemic just as it was
recovering from months of unrest over inequality. 
    Mexico's peso rose slightly versus the dollar.
Petroleos Mexicanos, the country's debt-ridden oil and gas firm,
said on Tuesday it will offer a swap for $22.4 billion worth of
bonds maturing between 2027 and 2060 as it seeks to manage its
massive debt load.
    Argentine over-the-counter bonds extended their rise since
the government unveiled a sweetened debt restructuring offer on
Sunday, which has raised hopes that the country could win
creditors over to a deal.    
    Ecuador also reached a deal with bondholders on Monday to
renegotiate its debt to cut outstanding capital payments and
extend maturities on the country's bonds.
    Key Latin American stock indexes and currencies at 1948 GMT:
     Stock indexes              Latest      Daily %
                                             change
 MSCI Emerging Markets            1070.89        1.74
                                           
 MSCI LatAm                       1982.10        0.68
                                           
 Brazil Bovespa                  99894.48        2.18
                                           
 Mexico IPC                      37529.18       -0.81
                                           
 Chile IPSA                       4189.18       -1.61
                                           
 Argentina MerVal                42695.02       0.465
                                           
 Colombia COLCAP                  1150.41        1.64
                                           
                                                     
        Currencies              Latest      Daily %
                                             change
 Brazil real                       5.3500        0.65
                                           
 Mexico peso                      22.7210        0.53
                                           
 Chile peso                         785.8        0.41
                                           
 Colombia peso                    3632.04       -0.20
 Peru sol                          3.5198        0.48
                                           
 Argentina peso (interbank)       70.9300       -0.07
                                           
 Argentina peso (parallel)            123        3.25
                                           
    

    
 (Reporting by Shreyashi Sanyal and Ambar Warrick in Bengaluru;
editing by Jonathan Oatis and Sonya Hepinstall)
  
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