January 26, 2018 / 10:49 PM / in 9 months

EMERGING MARKETS-Brazil markets extend rally as Lula conviction upheld

 (Updates prices, adds details on Mexico)
    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
election after an appeals court upheld his conviction for
corruption.
    The Brazilian real closed up 0.6 percent, a gain of
1.91 percent during the week. The benchmark Bovespa stock index
 hit an all-time high of 85,530.84, rising 2.21 percent,
and making for a gain of more than 5 percent this week. 
    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.
    Lula still has options. An electoral court must make a 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, lifted Brazil's
benchmark index, but miner Vale SA's stock tracked
iron ore prices lower.
    Mexico's S&P/BMV IPC stock index closed up 0.57
percent at its highest level since the start of September,
despite a marked drop in shares of broadcaster Grupo Televisa
.
    After Televisa revealed "some material weaknesses" in its
internal controls of financial information, the stock at one
point fell by more than 10 percent, before paring those losses
to close down 2.1 percent at 76.48 pesos.
    The Chilean peso fell nearly 0.5 percent as rising
on-warrant copper stocks weighed on prices of the industrial
metal. But the Mexican peso rose 0.65 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 2220 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
                                   Latest              
 MSCI Emerging Markets               1273.07     0.76     9.89
 MSCI LatAm                          3241.47     1.23    14.61
 Brazil Bovespa                     85530.84     2.21    11.95
 Mexico IPC                         51065.49     0.57     3.47
 Chile IPSA                          5855.67     0.76     5.23
 Chile IGPA                         29413.50     0.67     5.12
 Argentina MerVal                   35126.22    -0.04    16.83
 Venezuela IBC                       3662.12    27.01   189.92
                                                              
 Currencies                                   daily %    YTD %
                                               change   change
                                      Latest           
 Brazil real                          3.1201     0.60     6.19
 Mexico peso                          18.489     0.65     6.54
 Chile peso                           601.40    -0.47     2.20
 Colombia peso                          2814    -0.85     5.97
 Peru sol                              3.215    -0.16     3.58
 Argentina peso (interbank)          19.5625     0.11    -4.92
                                                       
 Argentina peso (parallel)             19.93    -0.10    -3.51
                                                       
 
 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn and Tom
Brown)
  
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