March 21, 2018 / 4:45 PM / 10 months ago

EMERGING MARKETS-Mexico markets jump on NAFTA talks optimism

    By Bruno Federowski
    SAO PAULO, March 21 (Reuters) - Mexican markets rose on
Wednesday on growing bets that the United States could soften
its stance on regional trade negotiations looming large over the
fortunes of Mexican exporters.
    U.S. President Donald Trump's administration dropped a
demand that all vehicles made in Canada and Mexico for export to
the United States contain at least 50 percent U.S. contents, the
Globe and Mail newspaper reported, citing sources.
    The report fueled speculation that talks around the North
American Free Trade Agreement (NAFTA) could edge closer to a
conclusion after dragging on longer than expected.
    Concerns that Trump's protectionist leanings could threaten
Mexico, which sells around four-fifths of its exports to the
United States, have weighed on demand for Mexican assets.
    But the country's currency and stocks spiked on Wednesday as
those fears dimmed.
    The peso was up nearly 1 percent, leading gains
among Latin American currencies and tracking similar strength in
the Canadian dollar.
    In a report, Grupo Banorte cited "speculation of a looser
stance and the prospect of a swift agreement" as driving sharp
gains in those markets.
    Mexico's benchmark S&P/BVM IPC stock index jumped
around 1 percent on a day when MSCI's emerging market index
 was nearly flat.
    Shares of auto parts maker Nemak SAB de CV were
the biggest gainer, while its controlling shareholder Alfa SAB
de CV advanced nearly 5 percent.
    Optimism over the NAFTA talks outshone a cautious stance in
broader emerging markets, where investors avoided higher-
yielding but riskier bets ahead of a Federal Reserve policy
statement that is expected to announce the first U.S. interest
rate hike of the year.
    Higher U.S. rates could dampen demand for emerging market
    Key Latin American stock indexes and currencies at 1630 GMT:
 Stock indexes                     Latest       Daily  YTD pct
                                                  pct   change
 MSCI Emerging Markets              1,209.93        0     4.44
 MSCI LatAm                         3,039.78     0.94     6.48
 Brazil Bovespa                    84,582.97      0.5    10.71
 Mexico IPC                        47,528.12     0.96    -3.70
 Chile IPSA                         5,551.39     0.15    -0.24
 Chile IGPA                        27,822.06     0.12    -0.57
 Argentina MerVal                  32,177.01     1.19     7.02
 Colombia IGBC                     11,658.94     1.01     2.54
 Currencies                           Latest    Daily  YTD pct
                                                  pct   change
 Brazil real                          3.2914     0.47     0.67
 Mexico peso                         18.5890     0.97     5.97
 Chile peso                            605.5     0.64     1.51
 Colombia peso                      2,846.74     0.82     4.75
 Peru sol                              3.257     0.25    -0.61
 Argentina peso (interbank)          20.2700    -0.02    -8.24
 Argentina peso (parallel)             20.95     0.10    -8.21
 (Reporting by Bruno Federowski, editing by G Crosse)
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