July 1, 2019 / 2:52 PM / 4 months ago

EMERGING MARKETS-Latam currencies, stocks surge on trade relief

    July 1 (Reuters) - A global rally in equities spilled over
to Latin America on Monday after the United States and China
agreed to restart trade negotiations, helping Brazil's main
stock index extend a stellar second-quarter performance.  
    Sao Paulo-listed shares which logged its biggest 
quarterly percentage gain in a decade on Friday, jumped another
1%, while the real firmed nearly 1% to trade at 3.8148 per
dollar.
    The buying came as U.S. President Donald Trump offered
concessions to China at the G20 summit in Osaka, Japan over the
weekend, including holding off on new tariffs and easing of
restrictions on tech company Huawei.
    Fears that a drawn-out trade dispute between the United
States and China will hit global growth have spurred bouts of
selling this year, with emerging market stocks posting their
worst monthly performance this year in May.
    However stocks have recovered on hopes major central bank
would tilt toward monetary policy easing to stir growth, while
the temporary trade truce helped risk appetite.
    "Consistent with the market's base-case expectations, any
further tariffs on goods have been put on hold for now," Citi
analysts wrote in a note. "We expect the unwinding of hedges
against bearish G20 risks to help EM FX."
    Further brightening mood, factory data showed Brazil avoided
slipping into contraction in June, with the IHS Markit
purchasing managers index of manufacturing activity rising to
51.0 from 50.2 the month before.
    Investors were also watching for signs of progress on the
country's pension reform bill, which is expected to go through a
vote in the congressional committee this week.
    The Mexican peso firmed 0.84%, while the Chilean peso
 gained slightly. The MSCI's index of Latin American
stocks jumped 1.25%, touching its highest level
since March 20.
    The Argentine peso was boosted by the country's
central bank move to set a new lower interest rate floor on its
benchmark "Leliq" notes at 58% for July. 
    The South American nation has had to hike interest rates to
stem a slide in the peso currency since last year, though the
rate, set by daily auctions of short-term Leliq notes, has been
coming down steadily over the past few months.

    Latin American stock indexes and currencies at 1949 GMT
    
 Stock indexes                       daily %
                            Latest    change
 MSCI Emerging Markets      1064.69     0.93
                                     
 MSCI LatAm                 2879.11     1.25
                                     
 Brazil Bovespa           102081.95      1.1
                                     
 Mexico IPC                43363.37     0.47
                                     
 Chile IPSA                       -        -
                                     
 Argentina MerVal                 -        -
                                     
 Colombia IGBC                    -        -
                                     
                                            
 Currencies                          daily %
                                      change
                             Latest  
 Brazil real                 3.8127     0.69
                                     
 Mexico peso                19.0560     0.84
                                     
 Chile peso                  675.46     0.14
                                     
 Colombia peso                    -        -
                                     
 Peru sol                     3.286     0.24
                                     
 Argentina peso             42.0500     1.09
 (interbank)                         
                                     
 

 (Reporting by Sruthi Shankar in Bengaluru
Editing by Alistair Bell)
  
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