September 12, 2019 / 7:58 PM / 2 months ago

EMERGING MARKETS-Latam stocks scale one-month highs on China-U.S. trade optimism

 (Updates prices, adds context on Mexico, Brazil)
    By Ambar Warrick
    Sept 12 (Reuters) - An index of Latin American stocks scaled
one-month highs on Thursday, while currencies strengthened as
conciliatory trade measures between the United States and China
aided risk appetite.
    U.S. President Donald Trump delayed an increase in tariffs
on Chinese goods by two weeks after China exempted some U.S.
drugs and other goods from tariffs. The moves underpinned
optimism over meaningful headway being made ahead of trade talks
scheduled in October.
    "The goodwill shown by both the U.S. and China lifted the
market, a combination of light positioning, cheap valuation and
the stability of the Chinese yuan could help emerging markets to
recover," Morgan Stanley strategists said in a note.
    "We think some emerging market high yielders will do well in
the near term."
    The European Central Bank's interest rate cut and outlining
of stimulus measures on Thursday also spurred buying on
expectations of other major economies resorting to similar
measures.
    Investors will now look to moves from the U.S. Federal
Reserve and the Brazilian central bank next week. Speculation
over likely interest rate cuts by the Fed has underpinned flows
into emerging markets this year.   
    MSCI's Latin American stocks index tacked on
about 0.8%, hitting its highest level since Aug. 12, propped up
by benchmark-heavy Brazilian shares.
    The Sao Paulo. index rose 1%, with materials stocks
pushing up the index the most.
    Commodity heavyweight Vale SA rose about 3.6%
after iron ore prices rose to a five-week high in anticipation
of some restocking demand ahead of a holiday in China.   
    Sources told Reuters that Brazil's development bank was
mulling strategies to sell its stakes in Vale and state-run oil
and gas heavyweight Petrobras.     
    Chilean stocks rose about 0.3% and were slated for
a seventh straight session of gains. 
    The broad optimism helped the Brazilian real gain
about 0.3% even as Senate leader Fernando Bezerra said the
passage of tax reforms would likely be delayed to 2020, a major
roadblock to the government's economic reform drive.

    The Mexican peso rose about 0.4% to near a one-month
high. 
    State-run oil firm Pemex on Thursday offered to prepay about
a third of its $14.7 billion bonds maturing between 2020-2023,
in President Andres Manuel Lopez Obrador's latest effort to
shore up the debt-addled firm.
    Yields on Mexico's benchmark 10-year bonds were
unchanged at 3:04 p.m. EDT (1904 GMT), having dipped earlier in
the day.
    Argentina's peso traded steady after the country
announced further control measures requiring anyone buying
foreign currency to present a sworn oath promising to wait at
least five days before using it to purchase bonds. 
    
    Latin American stock indexes and currencies at 1926 GMT
    
 Stock indexes                           Daily % change
                             Latest     
 MSCI Emerging Markets         1024.38             0.72
                                        
 MSCI LatAm                    2719.21             0.79
                                        
 Brazil Bovespa              104483.95                1
                                        
 Mexico IPC                   42696.48            -0.12
                                        
 Chile IPSA                    4973.55             0.33
                                        
 Argentina MerVal             28918.88            1.052
                                        
 Colombia IGBC                12926.27             0.34
                                        
                                                       
 Currencies                              Daily % change
                                        
                                Latest  
 Brazil real                    4.0566             0.18
                                        
 Mexico peso                   19.4185             0.44
                                        
 Chile peso                        709             0.94
                                        
 Colombia peso                    3363             0.33
 Peru sol                        3.324             0.42
                                        
 Argentina peso                56.1000             0.14
 (interbank)                            
                                        
 
 (Reporting by Ambar Warrick in Bengaluru; Editing by Paul
Simao)
  
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