November 5, 2018 / 3:52 PM / a year ago

EMERGING MARKETS-LatAm currencies, stocks gain ahead of U.S. elections

    By Aaron Saldanha
    Nov 5 (Reuters) - Latin American currencies recorded meager
gains on Monday as a weaker dollar helped overcome caution ahead
of U.S. congressional elections.
    Concerns that a strong showing by Democrats on Tuesday would
hinder U.S. President Donald Trump's agenda have played into a
weaker dollar.
    "The key risk for EM here is that Trump could become a lame
duck when it comes to domestic matters, given we are seeing a
divided Congress and focus on more geopolitics like the Middle
East ..." said Jakob Christensen, chief analyst and head of EM
research at Danske Bank.
    MSCI's index of currencies in Latin America
added 0.1 percent, while the MSCI index of stocks in the region
 rose 1.3 percent, led by gains in Brazil
and Mexico.
    Brazil's real weakened against the greenback, but the
Bovespa stock index traded 0.9 percent higher and was
near an all-time peak seen earlier in the session. 
    The index has gained about 17 percent this year amid broad
bullishness spurred by hopes of reforms by market-friendly
President-elect Jair Bolsonaro. 
    Energy firm Cosan SA Industria e Comércio led the
index's gains on the day, rising about 9.3 percent.
    Cosan said it will not take over Cosan Logística,
canceling the proposed deal amid shareholder concerns.

    Mexico's peso firmed 0.4 percent while stocks
were up 1.1 percent.
    The decision by incoming Mexican President Andres Manuel
Lopez Obrador (AMLO) to scrap a new airport for Mexico City has
raised doubts among investors about his market friendliness.

    "The Mexican peso's performance is purely a result of the
news relating to the airport. I think the market is giving AMLO
the benefit of the doubt," said Christian Lawrence, a senior
market strategist with Rabobank.
    Chile's peso, the top gainer among Latin American
currencies, traded near two-week highs after data showed
economic activity rose in September.    
    Argentinean benchmark equities rose 0.4 percent and
were set to record a fresh one-month closing high while the peso
 weakened about 0.3 percent.    
    Key Latin American stock indexes and currencies at 1527 GMT
 Stock indexes                               daily %     YTD %
                                 Latest       change    change
 MSCI Emerging Markets              991.94     -0.48    -13.96
 MSCI LatAm                        2758.89      1.26     -3.67
 Brazil Bovespa                   89173.33      0.85     16.72
 Mexico IPC                       45929.39      1.06     -6.94
 Chile IPSA                        5224.67      2.36      2.36
 Argentina MerVal                 31414.31     -0.02      4.49
 Colombia IGBC                    12219.76      0.35      7.47
 Currencies                                  daily %     YTD %
                                              change    change
 Brazil real                        3.6998     -0.17    -10.45
 Mexico peso                       19.9649      0.30     -1.33
 Chile peso                         681.05      2.27     -9.75
 Colombia peso                        3181      0.07     -6.26
 Peru sol                            3.359      0.36     -3.63
 Argentina peso (interbank)        35.5800     -0.17    -47.72
 (Reporting by Aaron Saldanha; Additional reporting by Agamoni
Ghosh in Bengaluru; Editing by Jeffrey Benkoe)
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