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EMERGING MARKETS-Brazil stocks erase early losses as Vale supports
June 18, 2013 / 4:22 PM / 4 years ago

EMERGING MARKETS-Brazil stocks erase early losses as Vale supports

* Vale shares rise on mining law announcement
    * U.S. Fed beginning policy meeting, bond-buying program
    * Brazil Bovespa nearly flat, Mexico IPC up 0.61 pct

    By Asher Levine
    SAO PAULO, June 18 (Reuters) - Brazilian stocks erased early
losses on Tuesday after the announcement of a new mining code
led shares of iron-ore mining giant Vale higher, though
investors remained cautious over a potential tapering of the
U.S. Federal Reserve's bond-buying program.
    Mexico's IPC index rose for the second straight day,
while Chile's bourse made up for the previous session's
    Brazil's benchmark Bovespa stock index edged into
positive territory after briefly touching its lowest level since
Aug. 2011 earlier in the session. 
    Much of the index's recovery on Tuesday was due to mining
firm Vale SA, which rose 2.4 percent after Brazil's
government unveiled a long-awaited bill to reform the country's
46-year-old mining code. The bill proposed new royalties of up
to 4 percent, double the current rate, and a new mine regulatory
    "The final decision wasn't too bad," said Marcello Paixao, a
partner with Principia Capital Management in Sao Paulo. "The
market was expecting this outcome, but there was the possibility
that it could have been worse, so many investors had been
holding back on buying the shares."
    Shares of America Latina Logistica SA, Brazil's
largest rail operator, fell 4.5 percent. The company on Tuesday
denied a report by local newspaper Valor Economico saying it was
considering a capital increase to fund expansion and the
upgrading of some assets. 
    Shares of planemaker Embraer rose nearly 3
percent after the company announced deals for more than a dozen
of its current passenger jets worth nearly $700 million at list
prices on Tuesday. 
    The Bovespa is on track for its sixth straight monthly loss,
with shares down nearly 9 percent in June alone.
    Investors are awaiting the outcome of a U.S. Federal Reserve
meeting, due to conclude on Wednesday, for signals on the future
of its bond-buying program.
    "There is a change going on in global portfolios," Paixao
said. "When we had a lot of international liquidity a lot of
money went to emerging markets looking for high yields. Now with
the outlook for the Fed reducing its bond buying, a lot of that
money is going back to the developed markets where it came
    Mexico's IPC index rose to its highest level in
nearly a week as shares of telecommunications firm America Movil
, controlled by billionaire Carlos Slim, gained 1.2
    Chile's IPSA index rose for the third session in
four as shares of retailer Cencosud added 3.3 percent.
    Cencosud reached a deal to let Itau Unibanco Holding SA
, Brazil's largest private-sector bank, operate the
retailer's credit card business, an industry source told Reuters
on Monday. 

    Latin America's key stock indexes at 1538 GMT:
 Stock indexes                            daily %     YTD %
                                Latest     change    change
 MSCI LatAm                    3,265.33      -0.7    -13.42
 Brazil Bovespa               49,111.85      0.05    -19.43
 Mexico IPC                   39,792.52      0.61     -8.95
 Chile IPSA                    3,993.21      0.52     -7.16
 Chile IGPA                   19,819.90      0.44     -5.93
 Argentina MerVal              3,037.19     -2.03      6.41
 Colombia IGBC                13,272.67      0.77     -9.81
 Peru IGRA                    16,759.25      0.68    -18.76
 Venezuela IBC               948,617.63      0.59    101.22

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