July 20, 2020 / 7:24 PM / 16 days ago

EMERGING MARKETS-Brazil's real, stocks lead Latam assets higher on vaccine optimism

    * Brazilian stocks at over four-month high
    * Real set for best day in nearly three weeks
    * Argentine peso continues to weaken

 (Adds background, updates prices)
    By Susan Mathew and Ambar Warrick
    July 20 (Reuters) - Most Latin American currencies came off
early losses on Monday, trading higher amid increased bets for a
COVID-19 vaccine after a wave of positive early-trial data.
    Early data from trials of three potential coronavirus
vaccines released on Monday, including a closely watched
candidate from Oxford University, increased confidence that a
vaccine can train the immune system to recognize and fight
COVID-19 without serious side effects.
    Most Latin American currencies gained on the news, with
analysts positing improvement in regional risk assets as more
countries in the region scale back virus-related lockdowns.
    Brazil's real came off mild initial losses and
was set for its best day in nearly three weeks. 
    On Friday, Brazilian Treasury Secretary Roberto Funchal said
the government is analyzing the possibility of allowing
Brazilians to withdraw money from their pension funds early,
with questions about the harm it could do to Brazilian Treasury
bonds being a major concern.
    Foreign exchange strategists at JP Morgan see Brazil's real
outperforming owing to better economic growth in China - a major
destination for Latin American commodity exports. 
    "There are some initial signals that China's growth
continues for a while longer, benefiting commodity prices and
currencies," they said. 
    "China's commodity import volume also maintained strong
momentum into June in the latest data. We think in this scenario
Brazil's real would outperform MXN." 
    Stocks in Brazil rose more than 1% to their highest
in more than four months, driven by gains in the communication
sector. 
    Telecom stocks TIM Participacoes and Telefonica
Brasil rallied after they teamed up with Mexico's
America Movil to make an offer for the mobile unit of
bankrupt Brazilian carrier Oi Group.  
    Chile's peso rose slightly after government officials
presented a plan to ease certain virus-related lockdowns as the
infection rate of the disease improved in some regions of the
country. Chile has so far reported 330,000 confirmed cases and
more than 8,500 deaths related to COVID-19.
    In Mexico, deaths from the disease rose to 39,184, while the
total number of cases stood at 344,224 as of Sunday.
 
    The peso rose slightly, remaining under pressure from
weaker oil prices amid worries over the pace of the global
spread of the pandemic. 
    Argentina's peso continued its slide into record low
territory. The country on Friday confirmed its highest daily
coronavirus caseload after easing restrictions.
    Colombian markets were closed for a local holiday. 
    
    Key Latin American stock indexes and currencies:
    
    Stock indexes             Latest      Daily % change
 MSCI Emerging Markets         1064.77                 0.92
                                        
 MSCI LatAm                    2024.26                 0.93
                                        
 Brazil Bovespa              104239.43                 1.31
                                        
 Mexico IPC                   36284.44                -0.12
                                        
 Chile IPSA                    3907.61                -2.18
                                        
 Argentina MerVal             45355.22               -0.264
                                        
                                                           
       Currencies             Latest      Daily % change
 Brazil real                    5.3329                 0.91
                                        
 Mexico peso                   22.4939                 0.20
                                        
 Chile peso                      784.8                 0.14
                                        
 Peru sol                       3.5027                 0.40
                                        
 Argentina peso                71.6500                -0.24
 (interbank)                            
                                        
 
 (Reporting by Susan Mathew in Bengaluru;
Editing by Chizu Nomiyama and Jonathan Oatis)
  
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