October 5, 2017 / 10:13 PM / a year ago

EMERGING MARKETS-Brazil stocks hit all-time high on economic optimism

 (Adds details from Mexico, Peru; updates prices)
    By Bruno Federowski
    SAO PAULO, Oct 5 (Reuters) - Brazil's benchmark stock index
on Thursday briefly broke above the 78,000-point level for the
first time ever, boosted by the outlook for an accelerating
economic recovery and lower interest rates.
    The Bovespa rose as much as 1.9 percent to 78,024, a
new all-time high, extending the index's gains so far this month
to 5 percent. However, the index later shed most of the early
gains to close up by just 0.03 percent at 76,617.53.
    Signs that Latin America's largest economy is emerging
faster than expected from the deepest recession in a century
have boosted demand for Brazilian assets.
    Low inflation has also allowed Brazil's central bank to
slash interest rates, with traders all but convinced they will
fall to record lows this year, heightening the allure of stocks.
    Elsewhere, Peru's stock index rose by 3.09 percent to its
highest level in nearly five years. It was boosted by a jump in
shares of miner Volcan after Glencore said
it was ramping up its stake in the firm.
    Economists at Itaú Unibanco on Thursday revised their
estimates for Brazilian gross domestic product growth in 2018 to
3 percent from 2.7 percent, saying the benchmark Selic interest
rate is likely to fall to 6.5 percent.
    Shares whose performance is closely tied to economic growth,
such as financials and utilities, led the
early rally. State-controlled oil company Petróleo Brasileiro SA
 also rose as expectations that major producers could
cut output next year lifted crude prices.
    Still, Brazil's real fell 0.67 percent as traders
avoided big bets ahead of key U.S. jobs data on Friday.
    Mexico's peso fell nearly 1.3 percent to its weakest level
in four months, dragged down by uncertainty over the future of
the North American Free Trade Agreement (NAFTA) and due to a
rise in the dollar fueled by stronger U.S. economic data. 
    New U.S. employment figures could help traders adjust their
bets over the pace of Federal Reserve interest rate increases in
the coming months.
    The U.S. central bank has signaled it will hike rates in
December, potentially reducing demand for higher-yielding
assets, but many investors expect it to take its time going
forward as inflation remains below its 2 percent target.
    Key Latin American stock indexes and currencies at 2155 GMT:
 Stock indexes                      Latest     Daily   YTD pct
                                                pct    change
 MSCI Emerging Markets              1,102.76     0.08    27.89
 MSCI LatAm                         3,000.00     0.06    28.17
 Brazil Bovespa                    76,617.53     0.03    27.21
 Mexico S&P/BVM IPC                50,480.92    -0.17    10.60
 Chile IPSA                         5,439.13    -0.21    31.02
 Chile IGPA                        27,210.85    -0.13    31.24
 Argentina MerVal                  27,015.58     2.04    59.69
 Colombia IGBC                     11,109.84     0.27     9.69
 Currencies                         Latest     Daily   YTD pct
                                                pct    change
 Brazil real                          3.1524    -0.67     3.07
 Mexico peso                         18.4995    -1.29    12.13
 Chile peso                           628.50     0.48     6.71
 Colombia peso                      2,925.60     0.33     2.58
 Peru sol                              3.261    -0.09     4.69
 Argentina peso (interbank)            17.39    -0.26    -8.71
 Argentina peso (parallel)             17.75     0.11    -5.24
 (Reporting by Bruno Federowski, Ursula Scollo and Miguel
Gutierrez; Editing by Jonathan Oatis)
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