August 24, 2017 / 4:54 PM / a year ago

EMERGING MARKETS-Brazil stocks up on gov't asset-sale plan; Mexico peso flat

    By Bruno Federowski
    SAO PAULO, Aug 24 (Reuters) - Brazilian stocks rose on
Thursday after a government council announced a massive sale of
state assets, fueling bets that the government will manage to
rein in the growth of public debt and cut a widening budget gap.
    Brazil intends to sell stakes in some of the country's
busiest airports as well as oil exploration, highway and power
dam licensing rights as President Michel Temer seeks to reduce
state involvement in the economy.
    The announcement followed a surprise move on Tuesday to
privatize state-controlled power utility Centrais Elétricas
Brasileiras SA, which triggered a market-wide rally.

    Brazil's benchmark Bovespa stock index rose 0.6
percent to a new six-year high, with shares of Eletrobras
, as the power utility is known, the biggest gainers.
    Also helping fuel optimism was a decision by the lower house
of Congress to approve the main text of a bill creating a new
market-based lending benchmark for state development bank BNDES
           that would greatly reduce discretionary subsidies.

    "Coupled with well-behaved inflation, this sets the stage
for the central bank to cut interest rates even more," analysts
at the Magliano brokerage wrote in a client note.
    The Mexican peso traded nearly flat after Mexico
and Canada dismissed U.S. President Donald Trump's threats to
scrap NAFTA, which had wreaked havoc in local markets the day
before, as a negotiating tactic.
    Yields paid on Mexican interest-rate futures rose after
minutes from the central bank's last rate-setting meeting showed
policymakers remained cautious with rising inflation, suggesting
rate cuts may be farther off than expected.
    "The discussion among directors was biased toward the need
to remain vigilant and ready to protect the integrity of the
inflation targeting framework, rather than laying out the case
for near-term rate cuts," Goldman Sachs' economists wrote in a
    Mexican inflation was higher than expected in the first half
of August, keeping pressure on the central bank to maintain high
borrowing costs.    
    Key Latin American stock indexes and currencies at 1620 GMT:
 Stock indexes                   Latest     Daily   YTD pct
                                             pct    change
 MSCI Emerging Markets           1,082.00      0.6    24.74
 MSCI LatAm                      2,885.34      0.9    22.18
 Brazil Bovespa                 70,899.78      0.6    17.72
 Mexico S&P/BVM IPC             51,427.03     0.29    12.67
 Chile IPSA                      5,134.24     0.12    23.68
 Chile IGPA                     25,642.86     0.11    23.67
 Argentina MerVal               23,181.03    -0.35    37.02
 Colombia IGBC                  10,893.35    -0.74     7.56
 Venezuela IBC                 199,348.45     0.59   528.76
 Currencies                      Latest     Daily   YTD pct
                                             pct    change
 Brazil real                       3.1363     0.15     3.60
 Mexico peso                      17.6900    -0.04    17.26
 Chile peso                         637.9     0.36     5.14
 Colombia peso                   2,976.71     0.11     0.83
 Peru sol                           3.236     0.03     5.50
 Argentina peso (interbank)       17.1750     0.38    -7.57
 Argentina peso (parallel)          18.22     0.44    -7.68
 (Reporting by Bruno Federowski)
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