January 26, 2018 / 2:58 PM / 24 days ago

EMERGING MARKETS-Brazil markets extend rally as Lula conviction upheld

    By Bruno Federowski
    BRASILIA, Jan 26 (Reuters) - Brazilian markets extended a
rally on Friday as traders bet leftist former President Luiz
Inácio Lula da Silva would be barred from running in this year's
elections after an appeals court upheld his conviction for
corruption.
    The Brazilian real firmed as much as 1.2 percent
before paring gains to around 0.1 percent due to profit-taking.
The benchmark Bovespa stock index touched an all-time
high at 84,523. 
    Lula, who is leading opinion polls and has vowed to undo
some of President Michel Temer's austerity efforts, could now be
ineligible to stand for election under Brazil's "clean record"
law, which bans political candidates whose convictions have been
upheld by an appellate court.
    But Lula still has options. An electoral court must make the
final ruling on his candidacy and would only do so once he
registers.
    The court's decision on Wednesday "reduces the risk of
unorthodox policymaking and opens up space for candidates that
support market-friendly reforms," Magliano brokerage analyst
Carlos Soares Rodrigues said.
    Blue-chips, including shares of banks and state-controlled
oil company Petróleo Brasileiro SA, added the most
points to Brazil's benchmark index, but miner Vale SA's
 stock tracked iron ore prices lower.
    The Chilean peso fell 0.3 percent as rising
on-warrant copper stocks weighed on prices of the industrial
metal. But the Mexican peso rose 0.2 percent, tracking
global weakness in the U.S. dollar.
    The dollar fell against a basket of currencies on
Friday as senior U.S. officials' comments this week in favor of
a weak greenback reverberated through currency markets.
    After U.S. President Donald Trump said on Thursday he
ultimately wanted the dollar to be strong, the currency pared
some losses, but it was on track for its biggest monthly drop
since March 2016.
    
    Key Latin American stock indexes and currencies at 1420 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
                                   Latest              
 MSCI Emerging Markets               1266.65     0.25     9.06
 MSCI LatAm                          3191.66    -0.32    13.22
 Brazil Bovespa                     83979.00     0.36     9.92
 Chile IPSA                          5801.94    -0.17     4.27
 Chile IGPA                         29175.19    -0.14     4.27
 Venezuela IBC                       2923.54     1.39   -90.78
                                                              
 Currencies                                   daily %    YTD %
                                               change   change
                                      Latest           
 Brazil real                          3.1543     0.12     5.04
 Mexico peso                         18.5675     0.23     6.09
 Chile peso                           600.72    -0.28     2.32
 Colombia peso                        2814.4    -0.89     5.96
 Peru sol                              3.214    -0.12     0.72
 Argentina peso (interbank)          19.5050     0.46    -4.64
                                                       
 Argentina peso (parallel)             19.91     0.60    -3.42
                                                       
 
 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn)
  
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