October 30, 2018 / 9:13 PM / 19 days ago

EMERGING MARKETS-Brazil stocks jump 3 percent, Mexico lowest since early 2016

    By Susan Mathew
    Oct 30 (Reuters) - A 3.7 percent jump in Brazil stocks and a
near 2 percent rise in Argentine stocks took Latin American
shares higher, while gains in Brazil's real and the Argentine
peso against a strong dollar helped the currency index cap
losses.
    A rebound on Wall Street also boosted sentiment and helped
the MSCI index of Latin American stocks log a
gain of over 1 percent and outperform the emerging markets stock
index which rose 0.2 percent.
    Brazil markets recovered from Monday's steep losses on
signals President-elect Jair Bolsonaro was moving towards
promised reforms after he said he would talk to the current
government next week to discuss projects that could be approved
later this year, including an urgently needed pension reform.
 
    Sao Paulo's Bovespa stock index climbed 3.6 percent
led by a 14.4 percent surge in shares of Telefonica Brasil SA
, Brazil's largest telecom firm, after it reported a
160 percent rise in quarterly profit.
    Shares of state-oil company Petrobras was the
biggest boost, up 6 percent on news it could sell an additional
$20 billion in assets through next year, indicating that the
company expects to maintain its robust pace of divestments.

    The real firmed 0.6 percent against the dollar, and
was the biggest contributor in helping the MSCI currency index
 stem losses.
    "Markets are trying to get their bearing after the steep
sell-off yesterday. So, its not surprising to see them
consolidating," said Win Thin, global head of emerging market
currency strategy at Brown Brothers Harriman.
    The Argentine peso's rose 0.4 percent, while Mexico's
currency edged higher in a volatile session which saw it
hit a four-month low before recovering. Official data showing
Mexico's economy rebounded in the third quarter also helped
sentiment.
    In the previous session, the peso plunged 3.5 percent and
the IPC stock index dived 4 percent following an
announcement by Mexican President-elect Andres Manuel Lopez
Obrador that the completion of a partially-built $13 billion
Mexico City airport will be canceled once he takes office.

    This spooked investors as markets realized that they were
too complacent on the political risk from the incoming President
said Brown Brothers Harriman's Thin.
    Mexico stocks closed at their lowest since February
2016 with airport operator GAP's 6.2 percent fall
leading losses.
    Commerzbank analysts said that by scrapping the project
contracts will get broken causing considerable doubt on whether
it is safe to invest in Mexico.
    
    Latin American stock indexes and currencies at 2046 GMT:
 Stock indexes                    Latest   Daily %      YTD %
                                            change     change
 MSCI Emerging Markets            936.30      0.16     -19.18
                                                    
 MSCI LatAm                      2650.32      1.04      -6.29
 Brazil Bovespa                 86885.71      3.69      13.72
 Mexico IPC                     43538.12     -0.78     -11.78
 Chile IPSA                      5016.10     -0.94      -0.94
 Argentina MerVal               29460.36      1.95      -2.01
 Colombia IGBC                  12497.32       0.6       9.91
                                                             
 Currencies                                Daily %      YTD %
                                            change     change
                                                    
                                  Latest            
 Brazil real                      3.6956      0.57     -10.36
                                                    
 Mexico peso                     20.0500      0.02      -1.75
                                                    
 Chile peso                        693.5     -0.46     -11.37
 Colombia peso                      3204     -0.59      -6.93
 Peru sol                          3.362     -0.24      -3.72
                                                    
 Argentina peso (interbank)      36.7200      0.54     -49.35
                                                    
 

 (Reporting by Susan Mathew in Bengaluru; editing by Grant
McCool)
  
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