EMERGING MARKETS-Latam currency index leaps to eight-month high as risk-off mood eases
* Currency index at highest since July *Brazil debt-to-GDP falls in January * Indexes set for weekly declines * Latam FX index up 0.9%, stocks up 3.5% (Updates with mid-session trading) ByLisa Pauline Mattackal ,Shashwat Chauhan andPurvi Agarwal March 14 (Reuters) - Latin American stocks and currencies saw robust gains on Friday, helped by rising commodity prices and as investors took a breather from a barrage of U.S. tariff policy headlines. MSCI's index for Latin American currencies was up 0.9%, trading near levels last seen in July, eyeing slight gains for the week. "The postponement of U.S. tariffs until 2 April and favorable political dynamics are generating a constructive environment for LatAm FX," analysts at Societe Generale wrote, adding they were "constructive" on Latam currencies. The Mexican peso, among the most sensitive currencies to U.S. tariffs, rose 0.8%. U.S. Secretary of StateMarco Rubio said late Thursday that cooperation with Mexican authorities has improved, but work still needs to be done on curtailing the flow of illegal drugs. The real jumped 1% after data showedBrazil's debt to GDP ratio fell unexpectedly in January. However, retail sales slipped for a third consecutive month in January. Despite the signs of a slowdown,Brazil's central bank is expected to hike rates to a near decade high at its meeting next week to combat inflation. "Our sense is that there's just about enough weakness in the economy to tip Copom towards ending the tightening cycle next week... but the inflation challenge means there's a very plausible scenario where they flag one or two more hikes, albeit of a smaller magnitude," saidWilliam Jackson , chief EM economist at Capital Economics. Oil prices rose, and gold jumped past the$3,000 per ounce level for the first time, also aiding currencies and stocks. Miner Vale gained 3.2%.Brazil's Petrobras andColombia's Ecopetrol rose 4.4% and 3.5%, respectively.Argentina's Merval leapt 4.5%, whileBrazil's Bovespa was up 2.7%. MSCI's gauge of regional stocks jumped 3.5%, set for its best dayNovember 2023 . The index saw steep losses earlier as markets were hit by an escalating global tariff war and concerns about slowing U.S. and global growth. Despite volatility, the Latin American stocks index has gained nearly 13% this year, sharply outperforming the U.S. benchmark index which has lost 4.4%.Peru's sol rose 0.3% after the central bank on Thursday held its benchmark interest rate at 4.75%, as expected. Elsewhere, Trump said there is a "very good chance" the war betweenRussia andUkraine can end after "productive" discussions with Russian PresidentVladimir Putin . That optimism helped lift stocks in Central andEastern Europe , which were further boosted after German political parties reached an agreement on a key debt deal. Prices ofUkraine dollar bonds rose. Data showedArgentina's monthly inflation rate accelerated to 2.4% in February, in line with analyst estimates. HIGHLIGHTS **Donald Trump makes Chinese stocks (somewhat) great again ** Shares inBrazil's Natura &Co dive more than 25% after quarterly results **Peru central bank sees strong economic growth, limited tariff blow Key Latin American stock indexes and currencies at2007 GMT : MSCI Emerging Markets 1120.11 1.27 MSCI LatAm 2092.95 3.51 Brazil Bovespa 129003.05 2.68 Mexico IPC 52505.56 1.21 Chile IPSA 7509 0.79 Argentina Merval 2333215.6 4.53 6 Colombia COLCAP 1620.36 1.77 Brazil real 5.7405 1.01 Mexico peso 19.929 0.75 Chile peso 928.66 0.56 Colombia peso 4097.5 0.73 Peru sol 3.656 0.33 Argentina peso (interbank) 1065.75 0.70 Argentina peso (parallel) 1220 1.23 (Reporting byLisa Mattackal ,Shashwat Chauhan andPurvi Agarwal in Bengaluru; Editing bySusan Fenton andAlistair Bell )
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