EMERGING MARKETS-Stocks, currencies gain as data raises US economy hopes

Thu Feb 6, 2014 11:43am EST

By Walter Brandimarte and Carolyn Cohn
    RIO DE JANEIRO/LONDON, Feb 6 (Reuters) - Emerging markets
gained on Thursday after stronger-than-expected U.S. economic
data bolstered investor optimism ahead of Friday's key payroll
report, allaying fears of a U.S. economic slowdown that could
dampen growth prospects for developing economies.
    Stocks rallied more than 2.5 percent in Latin America
according a benchmark MSCI index for the region,
while currencies such as the Chilean peso and the Turkish
lira strengthened over 1 percent.
    "Any good news related to payrolls is enough to boost the
market," said Raphael Figueiredo, a trader with Clear brokerage
in Sao Paulo.
    Expectations of a favorable U.S. jobs report on Friday
increased after data showed the number of Americans filing new
claims for unemployment benefits fell more than expected last
week. 
    Concerns about U.S. and Chinese growth prospects have added
to a recent emerging-market sell-off that drove many emerging
market currencies to multi-year lows over the past few days.
    The Mexican peso rose 0.6 percent against the dollar,
extending Wednesday's gains that were supported by Moody's
decision to upgrade the country's ratings to the coveted A
grade. 
    The Brazilian real gained 0.5 percent against the
dollar, also supported by steady central bank intervention in
the foreign exchange market. Besides providing investors with
currency hedge through currency swaps on a daily basis, the
central bank has also started to roll over swaps that mature
early next month.
    In Europe, the forint rose 0.5 percent to one-week
highs against the euro after Hungary's Economy Minister Mihaly
Varga said interest rates have fallen to a point where Hungarian
debt may become unattractive to investors, signaling that a
steady monetary easing campaign could be nearing its end.
 
    The bank, run by Prime Minister Viktor Orban's close ally
Gyorgy Matolcsy, has cut interest rates from 7 percent in 2012
to a record low of 2.85 percent to help an economic recovery,
and has flagged further possible easing.
    But investors have started to bet on a rate rise, following
abrupt hikes in India, South Africa and Turkey last week.
 
    The Turkish lira also hit one-week highs against the
dollar in the aftermath of last week's sharp rate move.
    The Czech crown was little changed after the
central bank kept its commitment to weaken the currency
throughout the year to support the economy and fight deflation.
  
    Ukraine's hryvnia showed an indicative fixing beyond 9 per
dollar for the first time in five years on Wednesday, according
to Thomson Reuters data, following ongoing political
turmoil and the recent freezing of Russian aid. Some analysts
said the central bank has abandoned its currency peg.
    The currency fixed at a slightly higher rate of 8.9838 per
dollar on Thursday morning.
    "Although the substantial devaluation of the hryvnia on Feb.
5 will ease pressure on the (central bank)'s dwindling reserves,
Ukraine still owes foreign creditors between $7 billion and $10
billion in 2014," said Eurasia analysts in a client note, adding
medium-term default risks were rising.
    
    Key Latin American stock indexes and currencies at 1630 GMT
    
     Stock indexes                      daily %    YTD %
                        Latest          change     change
 MSCI Emerging Markets  929.41          1.4        -8.59
                                                   
 MSCI LatAm             2,916.90        2.67       -11.24
                                                   
 Brazil Bovespa         47,776.41       2.47       -7.24
                                                   
 Mexico IPC             40,252.66       0.93       -5.79
                                                   
 Chile IPSA             3,435.87        0.68       -7.12
                                                   
 Chile IGPA             17,133.48       0.54       -6.00
                                                   
 Argentina MerVal       5,867.97        -0.94      8.85
                                                   
 Colombia IGBC          12,171.13       1.21       -6.89
                                                   
 Peru IGRA              15,094.56       0.15       -4.18
                                                   
 Venezuela IBC          2,805.42        -0.48      2.52
                                                   
                                                   
 Currencies                             daily %    YTD %
                              Latest    change     change
 Brazil real            2.3895          0.41       -1.37
                                                   
 Mexico peso            13.2300         0.43       -1.51
                                                   
 Chile peso             552.1000        1.34       -4.71
                                                   
 Colombia peso          2047.7500       0.08       -5.65
                                                   
 Peru sol               2.8190          0.18       -0.92
                                                   
 Argentina peso         7.8700          0.44       -17.50

 Argentina peso         12.3000         2.03       -18.70
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