April 3, 2019 / 9:44 PM / 3 months ago

EMERGING MARKETS-Latam FX, stocks mostly gain; Brazil assets drop

 (Rewrites throughout, updates prices, adds market strategist's
quote)
    By Aaron Saldanha
    April 3 (Reuters) - An index of Latin American currencies
gained on Wednesday as broad-based optimism following a report
the United States and China were nearing a trade deal overcame
weakness of assets in Brazil, whose government opened the door
to concessions in its proposed pension reforms.
    Brazil's economy minister staunchly defended the
government's proposal, insisting it is critical to fixing the
country's "doomed" social security system.

    Apart from Brazil, most Latin American assets rose.
    MSCI's index of Latin American currencies
rose 0.7 percent, supported by a softer dollar, while its Latin
American stocks index rose 0.2 percent.
    
    "While our base case remains that a social security reform 
that brings debt sustainability will pass ... the likelihood of
further spikes in (Brazilian real) risk premium is high,"
Armando Armenta, a strategist at UBS, wrote in a note.
    Brazil's real slid 0.4 percent on the day, while
yields on local, 10-year bonds hit the 9 percent
mark. 
    Sao Paulo-traded stocks gave up strong early gains
to end 0.9 percent lower as broad-based losses exacted a heavy
toll.
    State-run oil firm Petroleo Brasileiro SA (Petrobras) saw
its common shares and preferred shares
fall 2.1 percent and 2.7 percent, respectively. 
    Amid the general weakness, miner Vale SA's shares
gave up most of their early gains but ended up 0.3 percent. Vale
benefited from iron ore futures in China seeing their best day
in seven weeks.
    Cia Energetica de Minas Gerais rose 1.4 percent
as a director of the utility said it is considering a follow-on
offering before mid-year of distributor Light SA,
whose shares sank 7 percent.
    Mexico's peso and stocks held their ground as
positive sentiment around a possible U.S.-China trade deal was
negated by U.S. President Donald Trump's threats to close the
southern U.S. border with important trade partner Mexico.

    Chile's peso rose 0.9 percent, following a 1 percent 
gain in the price of copper, the country's top export. 
    
    Colombia's peso firmed 0.7 percent, while local
stocks added 0.3 percent.
    Argentina's peso softened while its stocks benchmark
 fell 3.8 percent to a three month-closing trough, on
losses across the board. 
    Argentina requested a waiver from the International Monetary
Fund as some data would not be available in time for the fund's
third review this week of $56.3 billion in standby financing
agreed last year.
        
    Latin American stock indexes and currencies at 2057 GMT:
    
 Stock indexes                                     daily %
                                       Latest       change
 MSCI Emerging Markets                   1079.80      0.81
 MSCI LatAm                              2764.72      0.19
 Brazil Bovespa                         94491.48     -0.94
 Mexico IPC                             43339.75      0.03
 Chile IPSA                              5222.96      0.28
 Argentina MerVal                       31765.11     -3.76
 Colombia IGBC                          13052.92      0.26
                                                          
 Currencies                                        daily %
                                                    change
                                          Latest  
 Brazil real                              3.8710      0.17
 Mexico peso                             19.2236      0.02
 Chile peso                                666.5      0.99
 Colombia peso                              3121      0.74
 Peru sol                                  3.295      0.46
 Argentina peso (interbank)              42.8400     -0.09
                                                  
 

 (Reporting by Aaron Saldanha in Bengaluru; editing by Grant
McCool)
  
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