March 13, 2020 / 2:53 PM / in 22 days

UPDATE 3-Brazil stocks jump 13% in biggest daily gain since 2008, but slump on week

(New throughout, updates prices, market activity and comments to close)

By Jamie McGeever

BRASILIA, March 13 (Reuters) - Brazilian stocks surged 13% on Friday, their biggest daily gain since 2008 on the prospect of global stimulus, but slumped on the week as fears grew over the damage the global coronavirus pandemic will inflict on Latin America's largest economy.

Brazil's stocks, bonds and currency all ended one of the most bruising weeks in history sharply lower.

The benchmark Bovespa index closed up 13% at 82,063 points . But despite the rally it is still down almost 30% so far this year, wiping out all the gains accumulated since President Jair Bolsonaro took office on Jan. 1 last year.

Market participants said huge price swings from one day to the next are typical of bear markets, an environment where an index or an asset is down 20% from its peak.

"What we're seeing today is just a reflection of a crazy week," said Jason Vieira, chief economist at Infinity Asset Management in Sao Paulo.

"Markets are very volatile, and that's not going to change in the short term. Everyone is watching coronavirus, and every market will move on this for at least the next month," he said.

Reflecting that uncertainty is far from over, one-month implied volatility in the dollar/real exchange rate rose slightly on Friday to 24%, its highest since Oct. 2018.

The rebound in stocks followed Thursday's 15% slide, the Bovespa's steepest one-day fall since 1998 that twice triggered an automatic halt to trading.

Brazil's real fell 0.5% to 4.81 per dollar on Friday, having earlier strengthened to 4.6437 per dollar. On Thursday, it fell below 5.00 per dollar for the first time ever, prompting the central bank to hold four spot dollar auctions in one day.

The central bank sold $2 billion in a repurchase auction on Friday, which helped stabilize the market, analysts said.

In fixed income, long-dated interest rate futures out to 2029 and the 10-year bond yield retreated. But they still ended the week sharply higher, with the 10-year yield up over 100 basis points this week, its biggest weekly rise in almost three years.

Below is a snapshot of Brazilian markets this week.

FX

*Central bank conducts seven spot FX interventions

*Central bank sells $7.25 bln in spot FX intervention

*Real hits record low 5.02/dollar on Thursday

*Real down 17% so far this year

Stocks

*Circuit breaker triggered a record three times in a week

*Up 13% on Friday, biggest gain since Oct. 28, 2008

*Down 15% on Thursday, biggest fall since Sept. 10, 1998

*Down 16% this week, biggest fall since Oct. 2008

*Down 29% in Q1, eyes steepest quarterly fall since Q3 1998

Bonds/rates

*Bond auctions canceled

*Treasury and central bank announce coordinated buybacks

*10y yield up 192 bps Thursday, biggest rise since 2005

*Traders report liquidity gaps in long-dated rate futures

Reporting by Jamie McGeever; Editing by Catherine Evans, Diane Craft and David Gregorio

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