April 4, 2018 / 6:45 PM / 15 days ago

EMERGING MARKETS-Politics, trade talk boost Mexico, rattle Brazil

    SAO PAULO, April 4 (Reuters) - Traders in Latin America's
largest equities markets were focused on major regional
political developments on Wednesday, with Mexico's benchmark IPC
index jumping about 1 percent and Brazil's Bovespa
 falling by a similar amount.
    In Mexico, traders said they were encouraged by positive
talk from officials about completing a renegotiation of the
North American Free Trade Agreement (NAFTA) in the near future.
    On Wednesday, Larry Kudlow, U.S. President Donald Trump's
top economic advisor, told reporters he was predicting positive
NAFTA news relatively soon that markets were "going to love."
Top Mexican industrial officials and a U.S. lawmaker directly
involved in the talks also made sanguine statements on Wednesday
and Tuesday.
    In a note, Mexican brokerage Metanalisis said that in
addition to NAFTA optimism, the Mexican market was being
supported by a Bank of America changing its perspective on the
IPC from 'underweight' to 'neutral.'
    The index had climbed 1.15 percent in afternoon trade.
    That contrasted heavily with the performance of equities in
Brazil, the region's largest economy, where the Bovespa index
had fallen 0.75 percent by the afternoon.
    Traders said the fall reflected a cautious tone in the
market, as the Supreme Court resumed hearing former president
Luiz Inacio Lula da Silva's plea to remain out of prison while
he appeals a corruption conviction.
    The leftist leader is Brazil's most popular national
politician, despite the conviction and six separate pending
corruption trials, and many market participants see the outcome
of the corruption cases as a danger to the country's economic
recovery.
    The Supreme Court is split on his request to be allowed to
exhaust his appeals before beginning to serve a 12-year prison
sentence for taking bribes, and a ruling is expected to hinge on
just one of its 11 justices.
    While losses were well spread across various sectors,
Brazilian stocks exposed to international steel markets were
consistent losers, as the United States and China continue to go
tit for tat in an escalating trade fight, rattling commodities
markets.
    Vale SA, a major miner of key steelmaking
ingredient iron ore, fell 1.8 percent, accounting for about 17
percent of the Bovespa's slide, while shares in steelmakers
Gerdau SA and Companhia Siderurgica Nacional SA
 both slid over 2 percent.
    
  Latin American stock indexes and currencies at 1806 GMT:
    
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1154.44     -1.34      1.01
                                                  
 MSCI LatAm                    3026.66     -0.54       7.6
                                                  
 Brazil Bovespa               83989.67     -0.75      9.93
                                                  
 Mexico IPC                   47221.06      1.15     -4.32
                                                  
 Chile IPSA                    5536.09      0.03     -0.51
                                                  
 Chile IGPA                   27725.78      0.05     -0.91
                                                  
 Argentina MerVal             31345.13      0.01      4.26
                                                  
 Colombia IGBC                11699.78      0.32      2.89
                                                  
 Venezuela IBC                 5406.92      2.65    328.05
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.3345      0.09     -0.64
                                                  
 Mexico peso                   18.1855      0.18      8.32
                                                  
 Chile peso                        603     -0.12      1.93
                                                  
 Colombia peso                  2786.7     -0.32      7.01
 Peru sol                        3.226     -0.09      0.34
                                                  
 Argentina peso                20.1775      0.01     -7.82
 (interbank)                                      
                                                  
 Argentina peso                  20.57      1.22     -6.51
 (parallel)                                       
                                                  
 
 (Reporting by Gram Slattery; editing by Grant McCool)
  
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