EMERGING MARKETS-Brazil stocks rise; Latam currencies weaken after two-day rally

By Agamoni Ghosh and Sruthi Shankar

Dec 13 (Reuters) – Brazilian stocks edged higher for the third straight day in line with global equities on signs of
easing China-U.S. trade tensions, while most Latin American currencies weakened.

Investors have been slowly growing less pessimistic about the chances of a China-U.S. trade deal after a slew of news this week pointed to easing tensions between the two powers.

China made its first major U.S. soybean purchases in more than six months on Wednesday, evidence that it was living up to pledges made when Presidents Donald Trump and Xi Jinping agreed to a 90-day detente to negotiate a trade deal.

Sao Paulo’s benchmark stock index rose 0.4 percent led by shares of material and consumer companies, shrugging off data that showed a surprise fall in retail sales volumes excluding cars and building materials in October from September.

Utility giant Companhia Paranaense de Energia was the top gainer on the index on news of a former executive director of a television channel, Daniel Pimentel Slaviero, taking over as the president of the state electricity company.

The Brazilian real edged lower, pushing MSCI’s Latin American currencies index down 0.6 percent.
Brazil’s central bank on Wednesday held interest rates at an all-time low and hinted that it will hold off from raising them for longer than expected.

“The dovish statement could cause the real to weaken a little, but I wouldn’t expect a huge move.”
– said Edward Glossop, emerging markets economist at Capital Economics, specializing in Latin America.

The Mexican peso dipped for the first time in three days as investors awaited the first budget from the country’s new leftist government on Saturday.

“I suspect there might be some weakness in the peso leading up to the budget. There could be some uncertainty about what might be included.” – said Glossop.

New finance minister Carlos Urzua, who is due to present the 2019 budget, told a congressional hearing he was targeting a primary surplus of about 1 percent of gross domestic product.

A group of investors holding bonds issued for a new Mexico City airport that President Andres Manuel Lopez Obrador has canceled said that it cannot support an amended bond buyback because problems still remain despite improvements to the plan.

Read full article on reuters.com

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