October 11, 2019 / 3:12 PM / 5 days ago

EMERGING MARKETS-Trade, Brexit deal hopes spark rally in Latam assets

    By Sruthi Shankar
    Oct 11 (Reuters) - The Mexican peso hit a two-month high on
Friday, while Latin American stocks jumped nearly 2% as optimism
over U.S.-China trade talks and a Brexit deal spurred a rush for
risky assets.
    The Mexican peso, vulnerable to trade risks due to
its reliance on U.S. economy, jumped 0.7% to 19.31 per dollar,
while the Chilean and the Colombian pesos rallied
about 0.8%, getting extra boost from a rally in metal and oil
prices.
    With the U.S. dollar down about 0.4% against a basket of
major currencies, emerging market currencies
were on course for their biggest percentage gain in more than
five weeks, rising 0.6%.
    The rally came as U.S. President Donald Trump said
U.S.-China trade talks were going well as the second day of
top-level negotiations got under way.
    Both sides have slapped duties on hundreds of billions of
dollars of goods during the 15-month trade dispute, which has
shaken financial markets and uprooted global supply chains.
    Investors are hoping the two sides will agree to a deal that
could avert further retaliatory measures, while expectations of
a last-minute Brexit deal between the European Union and Britain
as well as approval of a North American trade deal all added to
the optimism.
    "Global markets are heading into the end of the week on a
strong note as US-China trade talks and Brexit negotiations
appear to be heading toward a positive resolution," TD
Securities' Ned Rumpeltin wrote in a note. 
    "We find it difficult to forget that the history of both the
Brexit and trade disputes have been a series of false dawns."
    An index of Latin American stocks rallied,
with Brazil's Bovepsa leading gains with a 2% rise.
    The real, however, posted minimal gains among its
peers as data showed services sector activity fell in August
more steeply than economists had expected, another indication
that an economic recovery remained sluggish.
    Mexico's IPC index rose 1% after upbeat industrial
output data. The finance ministry said that recent operations to
reduce the debt burden of state oil company Pemex have
refinanced liabilities worth $20.1 billion.
    Colombia's and Chile's stock markets also
gained 1% each as oil prices rallied following reports of an
attack on an Iranian state-owned tanker, while copper prices
gained on trade optimism.
    
    Key Latin American stock indexes and currencies at 1432 GMT:
    
        Stock indexes                  Latest       Daily %
                                                     change
 MSCI Emerging Markets                    1014.67        1.82
 MSCI LatAm                               2705.57        1.85
 Brazil Bovespa                         104039.89        2.18
 Mexico IPC                              43363.37        1.01
 Chile IPSA                               5112.42        1.11
 Argentina MerVal                        32185.25       1.393
 Colombia IGBC                           12990.70         0.9
                                                             
           Currencies                  Latest       Daily %
                                                     change
 Brazil real                               4.1094        0.33
 Mexico peso                              19.3070        0.69
 Chile peso                                712.95        0.69
 Colombia peso                            3425.72        0.93
 Peru sol                                  3.3548        0.30
 Argentina peso (interbank)               58.0200       -0.07
                                                   
 

 (Reporting by Sruthi Shankar in Bengaluru
Editing by Matthew Lewis)
  
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