January 23, 2018 / 1:03 AM / a year ago

EMERGING MARKETS-Brazil markets steady ahead of ex-president Lula's trial

 (Updates with final prices, Mexican details)
    By Bruno Federowski
    BRASILIA, Jan 22 (Reuters) - Brazilian markets were
range-bound on Monday as traders avoided big bets ahead of the
trial of former President Luiz Inácio Lula da Silva, who is
leading opinion polls for this year's elections.
    Lula has vowed to reverse part of President Michel Temer's
reform agenda if elected, but he could be barred from running if
a higher court upholds his conviction for corruption at trial on
    In general, traders expect that to be the case, paving the
way for a market-friendly successor who will stick to Temer's
unpopular platform. Temer's approval rates have tumbled to
single-digits in the wake of corruption scandals, and he has
said he would not run for re-election.
    Coupled with strong global demand for emerging market
assets, those bets have underpinned a rally in Brazil's markets
that drove its benchmark stock index to all-time highs
and the Brazilian real to two-month peaks.
    Miriam Tavares, the head of currency trading at AGK
brokerage, said the Brazilian currency could strengthen even
more in the case of a unanimous ruling on Wednesday, potentially
driving it past the 3.20 per dollar milestone.
    A unanimous decision among the three judges could make it
harder for Lula to appeal, traders said.
    The Brazilian real closed down 0.25 percent, while
the benchmark Bovespa stock index rose 0.56 percent.
    Shares of Centrais Elétricas Brasileiras SA
jumped over 7 percent after the government sent to Congress a
draft bill proposing to privatize the state-controlled power
    Other Latin American markets seesawed as concerns over a
U.S. government shutdown stoked caution among investors.
    On Monday, the U.S. Congress voted to end a three-day
shutdown, approving another short-term funding bill as Democrats
accepted promises from Republicans for a broad debate later on
the future of young illegal immigrants.
    Mexico's S&P/BMV IPC rose 0.56 percent, driven by
gains in breadmaker Bimbo, telecommunications firm
America Movil and broadcaster Televisa.
    Latin American stock indexes and currencies at 2220 GMT:
 Stock indexes                               daily %   YTD %
                                  Latest      change  change
 MSCI Emerging Markets              1240.25     0.14    6.91
 MSCI LatAm                         3088.80     0.51    9.22
 Brazil Bovespa                    81675.42     0.56    6.90
 Mexico IPC                        49974.48     0.56    1.26
 Chile IPSA                         5827.91    -0.48    4.73
 Chile IGPA                        29287.26    -0.39    4.67
 Argentina MerVal                  33525.47     -0.2   11.51
 Colombia IGBC                     11978.21     0.67    5.34
 Currencies                                  daily %   YTD %
                                              change  change
 Brazil real                         3.2092    -0.25    3.24
 Mexico peso                        18.6850    -0.26    5.62
 Chile peso                             606     0.33    1.43
 Colombia peso                      2852.45    -0.12    4.42
 Peru sol                             3.213     0.09    0.75
 Argentina peso (interbank)          19.145    -0.81   -2.85
 Argentina peso (parallel)            19.75    -0.56   -2.63
 (Reporting by Bruno Federowski; editing by Grant McCool and
Cynthia Osterman)
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