October 10, 2019 / 7:55 PM / a month ago

EMERGING MARKETS-U.S.-China trade optimism lifts Latam stocks, FX

 (Updates prices)
    By Sruthi Shankar and Susan Mathew
    Oct 10 (Reuters) - Latin American stocks gained on Thursday
as investors rushed to buy risky assets, encouraged by signs
that Washington and Beijing could reach a trade deal, while most
currencies in the region firmed against a weaker dollar.
    MSCI's index of emerging market stocks rose 0.5%
after three days of losses, with Mexican shares surging
1% and Brazil's Bovespa up 0.6%, after U.S. President
Donald Trump confirmed he would meet Chinese Vice Premier Liu He
on Friday for further trade talks.
    That added to optimism following a report China was willing
to reach some sort of a deal, while an official from the U.S.
Chamber of Commerce said a currency agreement in exchange for
delaying further tariffs was possible.
    Washington has threatened to impose further tariffs on $250
billion worth of Chinese imports on Oct. 15.
    "It needs to be seen if this initiative allows China and the
U.S. to reach an agreement allowing a postponement of further
tariffs or even a reduction of already implemented tariffs,"
Morgan Stanley analysts wrote in a note.
    "But the renewed focus on the currency ... takes the focus
back to (dollar) overvaluation," the note added.
    In Washington, top trade negotiators met for the first time
since late July, seeking to hammer out a deal to end their
15-month trade war that has hit the global economy.
    The Mexican peso, a weather vane for trade sentiment,
touched a two-week high as the dollar softened against a basket
of major currencies.
    Rising copper prices aided the Chilean peso, which
rose 0.5%, while the Colombian peso posted its best day
in a week.
    Minutes from the Bank of Mexico's latest policy meeting
showed two members of the five-member board wanted a
50-basis-point interest rate cut in September instead of the
25-basis-point cut that was announced by the central bank.

    The minutes followed data on Wednesday showing consumer
prices cooled for a fifth straight month in September.

    Chile's central bank is expected to cut its main interest
rate for the third time this year, to 1.75% in October,
according to a monthly poll of 50 analysts published by the bank
on Thursday, as growth and inflation continue to sputter in the
world's top copper producer.
    Brazil's real weakened as a slower-than-expected rise
in retail sales in August raised concerns about the economy's
recovery. 
    Brazil's latest numbers followed data on Wednesday that
showed consumer price inflation in September fell to its lowest
in more than a year, increasing chances for a third rate cut
this year.
    
    Key Latin American stock indexes and currencies at 1933 GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets          997.44      0.45
                                        
 MSCI LatAm                    2648.88       0.6
                                        
 Brazil Bovespa              101822.34      0.57
                                        
 Mexico IPC                   42929.31      1.01
                                        
 Chile IPSA                    5056.11      0.47
                                        
 Argentina MerVal             31578.19     4.087
                                        
 Colombia IGBC                12898.76     -0.07
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    4.1226     -0.48
                                        
 Mexico peso                   19.4722      0.46
                                        
 Chile peso                      717.9      0.70
                                        
 Colombia peso                 3457.49      0.19
 Peru sol                        3.365      0.03
                                        
 Argentina peso                57.9700      0.03
 (interbank)                            
                                        
 
 (Reporting by Susan Mathew in Bengaluru
Editing by Paul Simao)
  
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