EMERGING MARKETS-Yields on Brazil interest rate futures drop on inflation data

Fri May 9, 2014 2:02pm EDT

SAO PAULO, May 9 (Reuters) - Yields on Brazilian
interest-rate futures dropped on Friday after
weaker-than-expected inflation data upped expectations the
central bank would pause its recent monetary tightening cycle.
    Latin American stocks edged slightly lower, while the
region's currencies were mostly weaker against the dollar as
profit-takers locked in recent gains.
    Brazil's benchmark IPCA consumer price index 
rose 6.28 percent in the 12 months through April, below the
median 6.42 percent forecast in a Reuters poll, government
statistics agency IBGE said on Friday. 
    Yields on interest rate futures <0#2DIJ:> fell across the
curve shortly after the data release. Brazil's central bank has
signaled it wants to stop raising its benchmark rate
 this month following nine straight increases since
April last year.
    "The central bank hadn't closed the door on another rate
hike because it wanted to wait for the IPCA data," said Paulo
Celso Nepomuceno, fixed income strategist at Coinvalores in Sao
Paulo, adding that considering Friday's data, "the monetary
tightening is over".
    In equity markets, the MSCI Latin American stock index
 fell slightly, with Mexico's IPC index 
and Chile's IPSA both down about 0.2 percent. 
    Brazil's Bovespa stock index dropped about 0.3
percent despite an poll released on Friday that showed a one
percentage point fall in voter support for President Dilma
Rousseff. 
    Brazilian stocks tend to rally when Rousseff, who is running
for re-election in October, drops in the polls. Many investors
have criticized her administration for its heavy-handed
intervention in the private sector and are hopeful that a new
administration will be more favorable to business, especially
state-run companies.
    "It's the second poll in a week that shows (an election)
runoff is becoming more probable. The news is positive but it
doesn't offer anything new, and the market has risen a lot
already on the back of polls," said Hersz Ferman, an economist
at Elite Corretora in Rio de Janeiro.
    Latin American currencies were nearly all slightly weaker
against the dollar as investors took profits following recent
gains. Chile's peso crept higher for a fourth day,
boosted by higher prices for copper, the country's main
export. 
    
    Key Latin American stock indexes and currencies at 1729 GMT:
    
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets           1007.63     -0.12      0.61
                                                    
 MSCI LatAm                      3339.38     -0.37      4.72
                                                    
 Brazil Bovespa                  53255.8     -0.31      3.39
                                                    
 Mexico IPC                     41578.98     -0.19     -2.69
                                                    
 Chile IPSA                      3904.66     -0.16      5.55
                                                    
 Chile IGPA                     19154.71     -0.15      5.09
                                                    
 Argentina MerVal                6825.64      0.16     26.61
                                                    
 Colombia IGBC                  13544.39      -0.2      3.62
                                                    
 Peru IGRA                      15839.44     -0.08      0.54
                                                    
 Venezuela IBC                    2289.5      0.18    -16.34
                                                    
                                                            
 Currencies                                daily %     YTD %
                                            change    change
                                  Latest            
 Brazil real                      2.2203     -0.29      6.15
                                                    
 Mexico peso                     12.9625     -0.15      0.52
                                                    
 Chile peso                        554.8      0.04     -5.17
                                                    
 Colombia peso                   1902.44     -0.07      1.55
 Peru sol                           2.79     -0.43      0.11
                                                    
 Argentina peso (interbank)       8.0050     -0.03    -18.89
                                                    
 Argentina peso (parallel)         10.61      1.13     -5.75
                                                    
 
 (Reporting by Bruno Federowski and Priscila Jordao; Writing by
Asher Levine; Editing by Peter Galloway)
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