EMERGING MARKETS-China data boosts Latam markets, Tombini comments sink real

Thu May 22, 2014 11:29am EDT

SAO PAULO, May 22 (Reuters) - Latin American currencies and
stocks gained on Thursday following better-than-expected
manufacturing data from China, though Brazil's real weakened
after the central bank hinted that a currency intervention
program currently in place may change.
    Data on Thursday showed China's factory sector posted its
best performance in five months in May, relieving investor
concerns over an economic slowdown in a key purchaser of Latin
American commodities such as soybeans, copper and iron-ore.
    Brazil's Bovespa stock index erased the previous
session's losses, driven by preferred shares of iron-ore miner
Vale SA, which counts China as its biggest customer.
Bank shares posted a partial rebound a day after a second-tier
court ruled against the industry in a decades-old case over
disputed compensation for savings accounts. 
    "No one knows what the impact will be yet, as there are many
variables," said Hersz Ferman, an economist with brokerage Elite
Corretora in Rio de Janeiro. "That's why the stocks are
volatile, though with a negative bias." 
    Mexico's IPC stock index rose for a second day,
driven by shares of broadcaster Grupo Televisa.
    Mexican annual inflation eased to a seven month low in early
May, boosting expectations that policymakers will leave interest
rates on hold this year at a record low to support weak growth. 
    Most Latin American currencies strengthened against the
dollar, tracking a rise in global risk appetite.
    Brazil's real reversed early gains, however, after
central bank chief Alexandre Tombini said on Thursday that
demand for currency swaps being offered under the bank's
currency intervention program has decreased.
    "The market interpreted that the central bank could reduce
the supply of swaps or interrupt the daily intervention
program," said Flavio Serrano, senior economist with Espirito
Santo Investment Bank in Sao Paulo.
    The currency swaps provide hedges against currency losses.
The central bank started its daily intervention program in the
foreign exchange market in August to stem a sharp drop in the
real, but slowed its pace this year.
    Key Latin American stock indexes and currencies at 1511 GMT:
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets           1039.94       0.8      2.89
                                                    
 MSCI LatAm                       3325.2      0.32      3.56
                                                    
 Brazil Bovespa                 52420.06      0.42      1.77
                                                    
 Mexico IPC                      41955.1       0.3     -1.81
                                                    
 Chile IPSA                      3911.83      0.79      5.75
                                                    
 Chile IGPA                     19149.95      0.63      5.06
                                                    
 Argentina MerVal                 7349.9      1.22     36.34
                                                    
 Colombia IGBC                  13630.22     -0.14      4.28
                                                    
 Peru IGRA                      15671.12      0.19     -0.52
                                                    
 Venezuela IBC                    2188.4         0    -20.03
                                                    
                                                            
 Currencies                                daily %     YTD %
                                            change    change
                                  Latest            
 Brazil real                      2.2153     -0.31      6.39
                                                    
 Mexico peso                     12.8872      0.32      1.11
                                                    
 Chile peso                        550.1      0.49     -4.36
                                                    
 Colombia peso                   1900.95      0.50      1.63
 Peru sol                          2.787      0.07      0.22
                                                    
 Argentina peso (interbank)       8.0600      0.03    -19.45
                                                    
 Argentina peso (parallel)         11.95      1.26    -16.32
                                                    
 
 (Reporting by Priscila Jordao and Bruno Federowski; Writing by
Asher Levine; editing by Andrew Hay)