EMERGING MARKETS-LatAm assets surge to 8-month high

* LatAm assets rise on risk appetite

* Positive economic data from U.S., China spurs rally

* EM equity funds rise sharply in last two months

By Manuela Badawy

NEW YORK, June 1 (Reuters) - Latin American stocks rose to
an 8-month high as investors poured money into high-risk assets
as economic data from China and the United States spurred hopes
the global recession is abating.

Morgan Stanley Capital International's Latin American stock
index .MILA00000PUS surged more than 4 percent to reach an
8-month high as investors, optimistic that the worst of the
global economic crisis is over, put their cash to work in
high-yielding securities.

"Emerging market assets continue to outperform the broader
rally in risk as money keeps piling in," Beat Siegenthaler
Chief Strategist of emerging markets at TD Securities said in a
research report.

"Emerging market equity funds received another $2.1 billion
in net inflows last week, which brings the total since the
March lows to a massive $23 billion. This means that in little
more than two months investors have poured in almost half of
the $54 billion that the asset class got in the record year of
2007."

U.S. manufacturing shrank at a slower-than-expected rate in
May while in China, the world's third-biggest economy,
industrial activity expanded in May, and surveys in Europe
showed the manufacturing recession was easing. U.S.
construction spending also rose in April while consumer
spending fell modestly.

Brazil's benchmark Bovespa stock index .BVSP jumped 3
percent, its third consecutive day of gains, to its strongest
level since Sept. 1. The index is up 36 percent this year.

Mexico's IPC index .MXX was 2.7 percent higher while
Argentina's MerVal index .MERV surged 4.1 percent.

Chile's blue-chip stocks .IPSA gained 2.28 percent, while
Chile's all-market IGPA index .IGPA rose 1.95 percent.
Colombia's IGBC stock index .IGBC rose 1.82 percent

Yield-hungry foreign investors are eager to buy exposure to
emerging market currencies many of which are appreciating
against the U.S. dollar.

The Brazilian real BRBY gained 1.59 percent to 1.944 per
dollar, after jumping 1.7 percent to its highest in eight
months. It has surged 20 percent so far in 2009

The Colombian peso COP= gained 1.59 percent to 2,104 per
dollar, a level not seen in eight months. The peso has
appreciated more than 18 percent since the lows in February
when the peso weakened to more than 2,600 against the dollar.

The Mexican peso MXN= was flat at 13.17 per dollar
underlining the weakness of the economy.

Mexico's economy is seen contracting 5.8 percent this year,
hit by a slump in export demand that is pushing the country
into a recession so deep it rivals the mid-1990s Tequila
Crisis. [nN01463471]

Mexico is a major exporter and manufactures everything from
cars to cell phones for U.S. consumers. The United States,
however, is trudging through a sharp recession where consumer
demand has fallen.

Emerging sovereign debt spreads narrowed 32 basis points
428 basis points over comparable U.S. Treasuries, the tightest
level in eight months, according to JP Morgan's Emerging
Markets Bond Index Plus (EMBI+) 11EMJ.JPMEMBIPLUS. Total
returns on the day were up 0.58 percent, as investors searched
for higher yield away from safe-haven U.S. government debt.

"Debt instruments accumulated another 3.2 percent in
monthly total returns, but this figure does little to stress
the spectacular numbers generated by high-Beta paper," Enrique
Alvarez, head of Latin American debt strategy at IDEAglobal
said in a note to clients.

"A return to abundant tolerance for riskier paper was set
as the base premise for the huge upside, and this was shared
across the globe."