EMERGING MARKETS-Latam currencies weaken on U.S. data, stocks gain

Wed Apr 2, 2014 1:32pm EDT

By Asher Levine
    SAO PAULO, April 2 (Reuters) - Latin American currencies
weakened against the dollar on Wednesday after encouraging U.S.
employment data raised expectations that monetary stimulus in
the world's largest economy would continue to be wound down at
its current pace.
    Most of the region's stock indexes rose, with the MSCI Latin
American share index touching its highest level
of the year. Shares of state-run oil firm Petroleo Brasileiro SA
 helped push Brazil's Bovespa up over 2
percent.
    Data released by ADP on Wednesday showed U.S. companies
stepped up hiring in March while the previous months' gains were
revised higher. 
    "The ADP numbers, especially the revision of January and
February, increases the likelihood of lower unemployment," said
Pedro Tuesta, an economist with research firm 4Cast, referring
to the U.S. government's key monthly employment report due
Friday.
    Investors are watching the data closely as it is expected to
influence the U.S. Federal Reserve's stance on its bond-buying
stimulus program, which has boosted Latin American currencies
and lent support to emerging market stocks.
    "The whole emerging market class asset is falling to
accommodate a stronger dollar," Tuesta said, adding that part of
Wednesday's move was due to profit-taking after a recent rally.
    Brazil's real weakened about 0.35 percent on
Wednesday, though is up nearly 4 percent against the dollar so
far this year. The Chilean, Colombian and Mexican
pesos all weakened less than 0.5 percent against the
dollar.
    Latin American currencies are expected to weaken over the
next 12 months despite recent signs of market appetite for
higher-yielding assets, a Reuters poll showed on Wednesday.
 
    Yields on Brazilian interest rate futures were
mostly stable ahead of the central bank's interest rate
decision, due after the market close on Wednesday. The bank is
widely expected to raise its benchmark Selic interest rate by 25
basis points to 11 percent. 
     
 

    Brazil's Bovespa was on track to close at its highest level
this year, with Petrobras preferred shares up over 4 percent as
investors extended a recent rally.
    Petrobras shares jumped in recent sessions on investor
optimism that President Dilma Rousseff was losing support ahead
of October's presidential election.
    "The market has recovered over all these past days, but is
still far from being in line with markets abroad," said Pedro
Arantes, a broker with BGC Liquidez in Sao Paulo. Arantes said
part of Petrobras' gains on Wednesday were likely due to
increased speculation that the Rousseff administration would
lose more support in future polls.
    Investors have been critical of her administration's
treatment of Petrobras, due to a policy that requires the
company to import fuel at a loss in order to tamp down
inflation.
    Elsewhere in Latin America, Mexico's IPC stock index 
rose for the fifth straight session, driven by shares of
blue-chip cement producer Cemex, while Chile's IPSA
index was little changed a day after a massive
earthquake off its northern coast.
    The 8.2 magnitude quake that shook northern Chile late on
Tuesday killed at least six people and triggered a tsunami that
pounded the coastline with two-meter (7-foot) waves.
 
    
    Key Latin American stock indexes and currencies at 1701 GMT:
    
 Stock indexes                  Latest       Daily  YTD pct 
                                               pct    change
                                            change  
 MSCI Emerging Markets          1,003.69      0.29     -0.19
                                                    
 MSCI LatAm                     3,226.81      1.09     -0.28
                                                    
 Brazil Bovespa                51,489.31      2.42     -0.03
                                                    
 Mexico IPC                    40,729.37      0.64     -4.68
                                                    
 Chile IPSA                     3,793.66     -0.03      2.55
                                                    
 Chile IGPA                     18,638.9      0.03      2.26
                                                    
 Argentina MerVal               6,440.65      1.04     19.47
                                                    
 Colombia IGBC                 13,975.15      0.61      6.92
                                                    
 Peru IGRA                      14,387.8      0.63     -8.67
                                                    
 Venezuela IBC                  2,523.19         0     -7.80
                                                    
                                                            
 Currencies                                  Daily   YTD pct
                                               pct    change
                                  Latest    change  
 Brazil real                      2.2682     -0.30      3.91
                                                    
 Mexico peso                      13.096     -0.35     -0.50
                                                    
 Chile peso                        553.3     -0.49     -4.92
                                                    
 Colombia peso                  1,961.85     -0.08     -1.52
 Peru sol                          2.806      0.07     -0.46
                                                    
 Argentina peso (interbank)       8.0000      0.03    -18.84
                                                    
 Argentina peso (parallel)         10.79      0.09     -7.32
                                                    
 
 (Additional reporting by Priscila Jordao, editing by G Crosse)
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