SAO PAULO, May 31 Brazilian shares dropped on
Wednesday tracking a decline in prices of commodities, but
stocks in meatpacker JBS SA jumped after its controlling
shareholder struck a leniency deal with authorities for its part
in a corruption scandal.
Shares of iron ore miner Vale SA and
state-controlled oil company Petróleo Brasileiro SA
subtracted the most points from Brazil's benchmark Bovespa
Shares of JBS were the only components of the
index trading higher as traders bet the meatpacker will hand out
additional dividends to help its controlling shareholder pay a
record-setting 10.3 billion reais ($3.2 billion) fine.
J&F said in a statement that the fine will be fully paid by
the holding company in order to protect JBS shareholders.
J&F has been at the center of a political scandal
threatening to oust President Michel Temer and fueling financial
market volatility in Latin America's largest economy.
Fears that the political turmoil could derail Temer's reform
agenda drove traders to dial back on bets for a sharp
125-basis-point rate cut after the market close on Wednesday,
instead aiming for a 100-basis-point reduction.
Yields paid on Brazilian rate-future contracts were nearly
flat ahead of the policy decision.
Most Latin American currencies strengthened slightly as new
data showing brisk factory activity in China fueled demand for
Caution lingered in Mexican markets, however, ahead of
Sunday's state government elections.
The leftist party of presidential hopeful Andres Manuel
Lopez Obrador was in a photo-finish race to strip control of
Mexico's most populous state from the country's ruling party,
polls showed on Wednesday.
Key Latin American stock indexes and currencies at 1640 GMT:
Stock indexes Latest Daily YTD
MSCI Emerging Markets 1,005.83 -0.59 17.34
MSCI LatAm 2,543.60 -0.7 9.44
Brazil Bovespa 63,062.68 -1.41 4.71
Mexico IPC 49,019.30 -0.52 7.40
Chile IPSA 4,845.80 -1.13 16.73
Chile IGPA 24,317.30 -1.04 17.28
Argentina MerVal 22,238.36 -0.32 31.45
Colombia IGBC 10,634.03 -0.78 5.00
Venezuela IBC 75,389.98 0.55 137.78
Currencies Latest Daily YTD
Brazil real 3.2471 0.42 0.06
Mexico peso 18.6500 0.29 11.23
Chile peso 671.6 0.48 -0.13
Colombia peso 2,916 0.10 2.93
Peru sol 3.271 0.34 4.37
Argentina peso (interbank) 16.1425 0.36 -1.66
Argentina peso (parallel) 16.32 0.80 3.06
(Reporting by Bruno Federowski, editing by G Crosse)