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EMERGING MARKETS-Latam stocks buoyed by stimulus hopes, trade optimism

Wed, 11th Sep 2019 20:37

(Updates prices, adds analyst quote)

By Ambar Warrick

Sept 11 (Reuters) - Most Latin American stocks rose on Wednesday as the prospect of increased stimulus for major economies and positive cues from the Sino-U.S. trade front aided risk appetite, while currencies were mixed ahead of the European Central Bank's policy decision.

MSCI's index of Latin American stocks rose 1.3%, holding near a one-month high, mirroring gains across global stock markets.

Investors perceived as conciliatory a move from China to exempt certain U.S. products from additional retaliatory tariffs for a year.

Markets also awaited the European Central Bank's monetary policy meeting on Thursday, where officials are widely expected to trim interest rates and introduce a stimulus package to shore up economic growth.

Brazilian stocks firmed about 0.5%, with most support coming from consumer discretionary stocks after data showed that retail sales for July marked their best rise this year.

Retailers Lojas Renner SA and Magazine Luiza SA rose about 2.5% and 4.6%, respectively, and were among the biggest boosts to the Bovespa.

Chilean stocks rose about 1.6% to a more than one-month high as the country's equities continued to recover from a 2-1/2 year low in late-August.

Mexican and Colombian equities added about 0.1% and 0.6%, respectively.

Mexico's government will give state-owned Pemex $5 billion so the world's most indebted oil company can pay off bonds, the company said earlier in the day.

Latin American currencies were mixed against a stronger dollar, with Brazil's real rising about 0.5% on the stronger retail sales reading. However, broader economic weakness in the country is expected to push Brazil's central bank to cut interest rates at a policy meeting next week.

The central bank has already cut interest rates to a record low of 6.00%.

"There's still an easing bias after this, so the market's obviously priced in a further easing trajectory from the BCB," said Sacha Tihanyi, deputy head of emerging markets strategy at TD Securities.

"Chances are it (the real) is going to be dependent on broad dollar moves. Today's a bit of a deviation however, as the dollar's doing well against the euro."

The Chilean peso dropped 0.6% as prices of copper, the country's top export, dipped after a sharp fall in Chinese auto sales raised fears of weaker demand.

Chile's central bank Governor Mario Marcel told Reuters that Chile could be heading for its third interest rate cut within six months, with trade and political tensions adding much pressure on the economy.

Latin American stock indexes and currencies at 1921 GMT:

 Stock indexes                                 Daily % change
                                 Latest
 MSCI Emerging Markets             1017.42               0.92

 MSCI LatAm                        2695.19               1.32

 Brazil Bovespa                  103507.04               0.46
 Mexico IPC                       42618.79               0.07
 Chile IPSA                        4957.00                1.6

 Argentina MerVal                 28704.84              0.959

 Colombia IGBC                    12826.69               0.56
 Currencies                                    Daily % change

                                    Latest
 Brazil real                        4.0615               0.82

 Mexico peso                       19.5238              -0.17

 Chile peso                            716              -0.61

 Colombia peso                      3374.1              -0.43
 Peru sol                            3.338               0.15

 Argentina peso (interbank)        56.1700              -0.21
(Reporting by Ambar Warrick in Bengaluru; Editing by Cynthia Osterman)
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