EMERGING MARKETS-Brazil stocks up on Bernanke comments, Mexico flat

Tue Feb 26, 2013 6:07pm EST

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* Mexican stocks trade at lowest since December
    * Bovespa down 0.59 pct, Mexico IPC off 0.02 pct


    By Danielle Assalve
    SAO PAULO, Feb 26 (Reuters) - Brazilian and Mexican stocks
shook off most losses on Tuesday after the head of the U.S.
Federal Reserve Bank defended the central bank's easy monetary
policies, helping to offset fears that political deadlock in
Italy could deepen Europe's debt crisis.
    Federal Reserve Chairman Ben Bernanke's testimony before
U.S. lawmakers dampened concerns that the U.S. central bank
could rein in its bond-purchase program that is designed to
stimulate the economy, something that has supported demand for
riskier assets, like stocks and commodities.
    Commodities producers led stocks higher in Brazil, while
Mexican retailer Wal-Mart de Mexico rebounded from a three-month
low hit on Monday.
    Analysts said Latin America's stocks remained vulnerable.
Europe's debt troubles as well as looming automatic spending
cuts in the United States due to begin on Friday, unless
lawmakers are able to reach a budget deal, could affect the
region's markets.
    Elections in Italy left no party with a parliamentary
majority, raising the risk that political gridlock in the euro
zone's third biggest economy could derail commitments to control
debt levels and push through reforms.  
    That could revive concerns of an unprecedented default by a
European country, which could spark a financial crisis. 
    "The sovereign solvency risk could resurface," said Guido
Chagas, senior partner at Brazil's Humaita Investimentos, who
nonetheless said the news out of Italy was weighing "less than
it should."
    Brazil's Bovespa index rose 0.59 percent to 56,948.87
points.
    The Bovespa has clawed back nearly 1.5 percent from a
three-month low hit last week amid concerns that Latin America's
top economy could raise interest rates to fight inflation even
as growth remains sluggish.
    Shares in iron ore miner Vale rose 2.54 percent.
The shares on Friday had hit their lowest price since October.
The company is expected to report its first quarterly loss in 10
years when it reports earnings on Wednesday, but traders said
the stock has already priced in that slump.
    Shares in Petrobras rose 1.24 percent after BTG
Pactual investment bank late on Monday cut its recommendation
for the stock to neutral due to the limited impact of the recent
increase in Brazilian fuel prices. 
    Mexico's IPC stock index dipped 0.02 percent to
43,489.20 points to close at its lowest level since late
December.
    The IPC has shed about 5 percent from a record high in
January, hurt by weaker-than-expected earnings and concerns that
U.S. lawmakers could fail to avert spending cuts that could slow
the economy of the United States, Mexico's top trading partner.
    Shares in bottler and retailer FEMSA shed 1.3
percent off an all-time high ahead of the earnings report due
from its Coca-Cola unit Coca-Cola FEMSA on Wednesday while
Wal-Mart de Mexico gained 2.02 percent.
    Copper miner and railroad operator Grupo Mexico
 shed 0.85 percent. Airport operator GAP said on
Tuesday it will appeal a court's decision that ruled certain of
its by-laws invalid. Grupo Mexico has sued the airport operator,
demanding it change the rules, and Grupo Mexico has launched an
offer to acquire more GAP shares. 
    Chile's IPSA index declined for the second straight
session, losing 0.37 percent to 4,499.38 as energy company
Enersis fell 1.27 percent.
    
    Latin America's key stock indexes at 2220 GMT:  
 Stock indexes                      daily %    YTD %
                                     change   change
                         Latest              
 MSCI LatAm               3,768.54     -0.8    -0.77
                                             
 Brazil Bovespa          56,948.87     0.59    -6.57
                                             
 Mexico IPC              43,489.20    -0.02    -0.50
                                             
 Chile IPSA               4,499.38    -0.37     4.60
                                             
 Chile IGPA              21,979.15    -0.29     4.31
                                             
 Argentina MerVal         3,119.61    -0.16     9.30
                                             
 Colombia IGBC           14,767.44    -0.41     0.35
                                             
 Peru IGRA               20,678.88     0.57     0.24
                                             
 Venezuela IBC           615,836.0    -1.11    30.63
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