EMERGING MARKETS-Latam stocks rise on hope for U.S. budget deal

Tue Dec 18, 2012 9:54pm EST

Related Topics

* Obama, Boehner narrow differences on taxes for wealthy
    * Foreign investors returning to Bovespa
    * Brazil Bovespa gains 1.5 pct, Mexico IPC up 1.13 pct


    By Asher Levine and Danielle Assalve
    SAO PAULO, Dec 18 (Reuters) - Mexican stocks rose to a
record high on Tuesday and Brazilian stocks hit a twelve-week
high as signs of progress in U.S. budget negotiations boosted
appetite for riskier assets.
    Shares rose after President Barack Obama on Monday moved
closer to Republican House of Representatives Speaker John
Boehner in budget negotiations over tax rates for high earners.
Boehner said Tuesday that Obama's most recent offer was "not
there yet" but said he still hopes he can reach a deal with the
White House.  
    Both sides need to reach an agreement to avert the "fiscal
cliff" of automatic tax hikes and spending cuts that would kick
in next year, fears of which have weighed on demand for Latin
American equities.
     "There is expectation that they will reach an accord this
year, which is cheering up the market," said Felipe Rocha, an
analyst with Omar Camargo Corretora in Curitiba, Brazil. "It's
still not totally priced in yet, though, so if an agreement is
reached, stocks have space to gain a bit more."
    Brazil's benchmark Bovespa stock index rose 1.5
percent to 60,460.73, its highest since late September.
    Preferred shares of iron-ore mining firm Vale SA 
contributed most to the index's rise, climbing 1.7 1 percent,
while steelmaker Usinas Siderurgicas de Minas Gerais SA
, known as Usiminas, gained 7.5 pe r cent.
    Shares of state-controlled oil company Petrobras 
rose 1 .26 p ercent despite a decision by credit ratings company
Moody's Investors Service to revise the outlook on the company's
A3 credit rating to "negative" from "stable" on Monday.
 
    Net foreign investor flows into the Sao Paulo stock market 
reached 1.43 billion reais ($682.4 million) for the first two
weeks of December, the stock market said Tuesday. Year-to-date,
however, there has been a net foreign investor outflow of 463.2
million reais.
    Foreign investors are cautiously stepping back into
Brazilian equities after fears of government intervention in the
private sector and worries over stagnant economic growth led
them away in recent months.
    "As worries over government intervention get priced in
better and as the situation in Europe clears up a bit...it
changes risk perception and allows foreigners to up their bets
on the growth in our economy," said Daniel Garcia, retail
trading manager with Corretora Souza Barros in Sao Paulo.
    Shares of JBS SA, the world's largest meatpacker,
rose 3 .15 p ercent after analysts at BTG Pactual Group upped
their price target for the stock on Tuesday, citing management's
effective reduction of the company's debt. 
    Mexico's IPC index gained for the third session in
four, adding 1 .13 percent and c losing at a record-high 43,8 25.97
p oints.
    A technical indicator known as the relative strength index
rose to its most "overbought" level since mid-July, however,
indicating stocks may be due to fall in coming sessions.
    Bank Banorte rose 2.53 percent while bottling
group Femsa added 1.95 percent. 
    Shares of retailer Wal-Mart de Mexico dropped
1 .5 1 p ercent after the New York Times reported on Monday that
the firm routinely used bribes to open stores in desirable
locations. 
    Chile's IPSA index rose 0.2 percent as a 2.58
p ercent gain by retailer Cencosud was partially offset
by a 1. 08 p e rcent loss by regional energy group Endesa.

    Latin America's key stock indexes at 0233 GMT:
    
    
 Stock indexes                    daily %  year-to
                         Latest    change   date %
                                            change
 MSCI LatAm             3,775.75     1.04     4.82
                                           
 Brazil Bovespa        60,460.73      1.5     6.53
                                           
 Mexico IPC            43,825.97     1.13    18.20
                                           
 Chile IPSA             4,288.38      0.2     2.65
                                           
 Chile IGPA            20,963.28     0.17     4.14
                                           
 Argentina MerVal       2,871.32     4.06    16.60
                                           
 Colombia IGBC         14,578.61    -0.09    15.10
                                           
 Peru IGRA             20,292.21     0.64     4.21
                                           
 Venezuela IBC        465,305.47    -2.33   297.57
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