January 25, 2018 / 12:56 AM / a year ago

EMERGING MARKETS-Brazil markets soar as Lula corruption conviction upheld

 (Updates with final prices, Mexico details)
    By Bruno Federowski
    BRASILIA, Jan 24 (Reuters) - Brazilian markets surged on
Wednesday as an appeals court upheld a corruption conviction
that could stop former President Luiz Inácio Lula da Silva from
running in this year's presidential race, adding to a global
emerging market rally.
    The benchmark Bovespa stock index hit an all-time
high above 83,000 points as three appellate court judges voted
to uphold convictions against Lula for taking bribes and money
laundering. They also added 2-1/2 years to his sentence,
condemning him to 12 years in prison.
    Lula, who has railed against President Michel Temer's
austerity platform and is leading opinion polls for the October
election, can still appeal the decision.
    An electoral court must make the final ruling on any
candidacy, and would only do so once a candidate had registered.
    Blue-chip Brazilian stocks such as lenders Itaú Unibanco
Holding SA and Banco Bradesco SA and
state-controlled oil firm Petróleo Brasileiro SA, or
Petrobras, were among leaders of the bourse's upswing.
    The rally spread to neighboring Argentina, whose Merval
stock index rose 3.11 percent to hit a record high of
nearly 35,000 points, boosted by the local listing of Petrobras
shares, which jumped by over 11 percent.
    One of the few Brazilian shares to take a knock was wood
pulp producer Fibria Celulose SA, which could see the
value of its exports fall as the Brazilian real appreciates.
    The real firmed 2.44 percent, the biggest gainer
among Latin American currencies amid broad U.S. dollar weakness.
    The dollar slid to a three-year low against a basket of
currencies after the U.S. Treasury secretary said he welcomed
weakness in the currency. 
    In a break with the traditional strong dollar mantra,
Treasury Secretary Steven Mnuchin said the weaker dollar was
positive for American trade.
    Currencies from Mexico, Chile and Colombia
 all firmed by over 1 percent. Colombia's peso gained 1.48
percent, reaching its strongest level since July 2015, also
boosted by rising oil prices.
    Helping to support demand for the Mexican peso were upbeat
comments by negotiators meeting in Montreal to overhaul the
North American Free Trade Agreement.
    Key Latin American stock indexes and currencies at 2240 GMT:
 Stock indexes                               daily %    YTD %
                                              change   change
 MSCI Emerging Markets              1261.79     0.24     8.66
 MSCI LatAm                         3169.96     3.88    12.09
 Brazil Bovespa                    83680.00     3.72     9.53
 Mexico S&P/BMV IPC                50746.93     0.97     2.82
 Chile IPSA                         5798.25    -0.03     4.20
 Chile IGPA                        29134.71    -0.07     4.18
 Argentina MerVal                  34948.56     3.11    16.24
 Currencies                                  daily %    YTD %
                                              change   change
 Brazil real                         3.1590     2.44     4.88
 Mexico peso                        18.5040     1.03     6.46
 Chile peso                          602.80     1.05     1.97
 Colombia peso                      2813.65     1.48     5.98
 Peru sol                             3.213     0.19     0.75
 Argentina peso (interbank)         19.6525    -1.65    -5.36
 Argentina peso (parallel)            19.98    -0.75    -3.75
 (Reporting by Bruno Federowski; Editing by Meredith Mazzilli
and Leslie Adler)
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