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EMERGING MARKETS-Latam stocks soar on Fed action, Brazil tax breaks
September 13, 2012 / 7:11 PM / 5 years ago

EMERGING MARKETS-Latam stocks soar on Fed action, Brazil tax breaks

* U.S. Fed announces aggressive new monetary stimulus
    * Brazil government extends tax breaks to more industries
    * Brazil Bovespa gains 3.35 pct, Mexico IPC up 0.57 pct

    By Asher Levine and Danielle Assalve
    SAO PAULO, Sept 13 (Reuters) - Brazilian stocks rose their
most in six weeks o n T hursday after the U.S. Federal Reserve
announced another round of monetary stimulus and Brazil's
government said it would extend payroll tax breaks to more
    Mexican shares also reversed early losses, helping the MSCI
Latin American stock index stretch its rally
into a seventh day, rising 2.19 percent 3,754.39, its highest
level in four months.
    The Fed launched an aggressive monetary stimulus program on
T hursday, saying it will buy $40 billion of mortgage-backed
securities per month and likely leave interest rates at current
rock-bottom lows until at least mid-2015. 
    Shares gained after the Fed statement as investors stepped
up bets that the stimulus would help boost growth in the world's
largest economy and lead to more demand for riskier Latin
American equities.
    "The Fed announced very aggressive stimulus," said Pablo
Spyer, a director at Mirae Securities in Sao Paulo. "We'll see a
big inflow of funds to emerging markets, especially considering
that all the developed economies have interest rates near zero
and our rate is extremely attractive."
    Shortly after the Fed's statement, Brazilian Finance
Minister Guido Mantega announced payroll tax breaks for 25
industries, including wood pulp producers, meat packers and
freight transportation. 
    Brazil's Bovespa jumped, rising 3.35 percent to 61,929.27,
its highest level in over four months.
    Companies that extended gains after the announcements
included meat exporters JBS and Brasil Foods
, as well as wood pulp producers Suzano,
Fibria and Klabin.
    "Despite the gains, it's still early to think about a
consistent trend for the market, because there are still other
risk events out there, such as a China slowdown and the question
of Spain (and Europe)," said Gustavo Mendonça, economist with
Saga Capital in Rio de Janeiro.
    Brazilian logistics company LLX pared losses to
3.8 percent after plunging more than 10 percent earlier in the
session after controlling shareholder Eike Batista canceled
plans to buy back LLX shares and delist the company.
    Mexico's IPC index rose for a third straight day, its
most in over a week, adding 0.57 percent to 40,477.44.
    Retail giant Wal-Mart de Mexico added 1.61
percent, contributing most to the index's gains, while bottling
group Femsa rose 1.1 percent.
    Chile's IPSA index reversed early losses, rising
0.23 percent to 4,182.18 and posting its fifth gain in six
    Industrial conglomerate Copec rose 0.66 percent,
while Banco Santander Chile added 0.49 percent.

    Latin America's key stock indexes at 18:39 GMT:
 Stock indexes                           daily %   yearly %
                          Latest          change     change
 MSCI LatAm                  3,754.39       2.19       1.99
 Brazil Bovespa             61,929.27       3.35       9.12
 Mexico IPC                 40,477.44       0.57       9.17
 Chile IPSA                  4,182.18       0.23       0.11
 Chile IGPA                 20,329.74       0.17       0.99
 Argentina MerVal            2,489.11       2.17       1.08
 Colombia IGBC              14,314.18       1.12      13.02
 Peru IGRA                  21,344.31       1.65       9.61
 Venezuela IBC             297,072.50          0     153.83

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