October 22, 2018 / 3:24 PM / 9 months ago

EMERGING MARKETS-Brazil stocks gain; Mexican peso weakens as Trump warns on migrant caravan

    By Aaron Saldanha
    Oct 22 (Reuters) - Brazilian stocks were the biggest gainers
among their Latin American peers on Monday with emerging market
sentiment boosted as China promised to provide stimulus to
stabilize its economy and offset the impact of U.S. tariffs.
    The MSCI index of Latin American stocks rose
1.2 percent, matching the gain in the wider MSCI emerging market
shares index.
    "Markets are in a bit of a state of flux at the moment. It
doesn't take much to scare them. It doesn't take much to provide
relief," said Christian Lawrence, a senior market strategist
with Rabobank in New York.
    "It is mostly because of the 4 percent rally in the Shanghai
(index) which clearly set the tone ... in general we are seeing
more of a positive tone this morning."
    The Shanghai Composite Index recorded an 12-day
closing high as investors applauded Chinese regulators'
statements of support.
    Brazil's equity benchmark rose on broad-based gains
and was on track to record its biggest gain in nearly a week.
    Vale SA rose 1.4 percent after Brazilian pension
fund Previ's chief executive officer said it would not sell
shares in the iron ore miner before the end of the year.

    Brazil's real was 1.2 percent firmer against the
dollar, continuing a rally as the country headed into the
presidential election run-off next weekend.
    Presidential front-runner and market favorite Jair Bolsonaro
on Saturday did not rule out keeping central bank chief Ilan
Goldfajn in the job, despite a report last week that the banker
was preparing to depart by the end of the year.

    Goldfajn has sought to keep a tight lid on inflation in
Latin America's largest economy since taking the helm of the
central bank in June 2016.
    Argentina's equity benchmark and its peso
were both about 0.2 percent firmer.
    Chile's peso also firmed. The country concluded talks
for a free trade deal with Brazil, its largest trade partner in
Latin America, Brazil's government said.
    Mexico's peso weakened 0.4 percent as U.S. President
Donald Trump reiterated his objections to a U.S.-bound migrant
caravan from Central America.
    Trump said on Monday he has alerted the U.S. military and
federal border authorities that the caravan was a national
emergency and has vowed to cut aid to Central America.

    "If Trump does decide to go down that route, then clearly it
poses a risk to Mexico-U.S. relations at time where we are going
to be seeing a (presidential) handover in less that two months,"
said Rabobank's Lawrence.  
    Key Latin American stock indexes and currencies at 1439 GMT
 Stock indexes                                 daily %     YTD %
                               Latest           change    change
 MSCI Emerging Markets            983.51          1.24    -16.14
 MSCI LatAm                      2737.71          1.31     -4.45
 Brazil Bovespa                 85243.30          1.22     11.57
 Mexico IPC                     47256.79         -0.38     -4.25
 Chile IPSA                      5127.22          0.17      0.17
 Argentina MerVal               28619.62         -0.19     -4.81
 Colombia IGBC                  12504.42         -0.07      9.97
 Currencies                                    daily %     YTD %
                                                change    change
 Brazil real                      3.6713          1.12     -9.75
 Mexico peso                     19.3492         -0.48      1.81
 Chile peso                          680          0.07     -9.61
 Colombia peso                   3082.45         -0.21     -3.26
 Peru sol                          3.333         -0.06     -2.88
 Argentina peso (interbank)      36.5050          0.10    -49.05
 Argentina peso (parallel)          36.5          1.37    -47.32

 (Reporting by Aaron Saldanha and Susan Mathew in Bengaluru;
Editing by Jeffrey Benkoe)
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