EMERGING MARKETS-Latam stocks, currencies rise following ECB rate cut

Thu Jun 5, 2014 11:57am EDT

SAO PAULO, June 5 (Reuters) - Latin American stocks and
currencies gained on Thursday after the European Central Bank
unleashed measures to support the euro zone economy, boosting
the outlook for global liquidity and feeding risk appetite.
    Nearly every currency in the region strengthened modestly,
with the MSCI Latin American stock index posting
its biggest one-day gain in two weeks.
    The ECB cut all its main interest rates to record lows on
Thursday while imposing negative interest rates on its overnight
depositors and offering banks new long-term funds.
 
    "This increases global liquidity, which affects emerging
markets," said Gustavo Mendonça, an economist with Saga Capital
in Rio de Janeiro. "Even more so for stock markets like ours
which are...far from their historic highs."
    Brazil's Bovespa stock index rose almost 0.4
percent, nearly erasing the previous session's loss. 
    The biggest gainer was retailer GPA SA, which
rose 2.7 percent. The company's board, along with other
subsidiaries of its parent company, French retailer Casino
, approved a plan to merge their e-commerce units on
Wednesday. 
    Mexico's IPC stock index rose for the third session
in four, boosted by encouraging consumer confidence data.
    Currencies across the region posted modest gains against the
dollar as traders upped bets that the ECB's policy moves would
help spur bigger inflows.
    Yields on Brazilian interest rate futures <0#DIJ:> dropped
across the maturity curve after Brazil's central bank signaled
it is likely to keep interest rates stable for some time despite
inflation pressure, according to minutes released on Thursday
from its latest policy-setting meeting. 
    "If there is any move in the target (interest) rate, it is
likely to be a southbound shift," Espirito Santo Investment Bank
analyst Jankiel Santos wrote in a client note. "However, given
that the government's inflation forecasts still point towards
higher-than-targeted results, we think (monetary policy
committee) members are likely to keep the Selic target rate at
11 percent for a while."
    
    Key Latin American stock indexes and currencies at 1535 GMT:
    
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets           1036.35       0.5      2.84
                                                    
 MSCI LatAm                      3267.23      0.82      1.24
                                                    
 Brazil Bovespa                 52018.15      0.36      0.99
                                                    
 Mexico IPC                     42117.51      0.39     -1.43
                                                    
 Chile IPSA                       3929.7      0.33      6.23
                                                    
 Chile IGPA                     19173.19      0.28      5.19
                                                    
 Argentina MerVal                7792.61      1.26     44.55
                                                    
 Colombia IGBC                  13820.55      0.29      5.73
                                                    
 Peru IGRA                      15735.54      0.43     -0.11
                                                    
 Venezuela IBC                   2203.41         0    -19.48
                                                    
                                                            
 Currencies                                daily %     YTD %
                                            change    change
                                  Latest            
 Brazil real                      2.2712      0.52      3.77
                                                    
 Mexico peso                     12.8837      0.29      1.14
                                                    
 Chile peso                          551      0.36     -4.52
                                                    
 Colombia peso                    1892.4      0.31      2.09
 Peru sol                          2.784      0.18      0.32
                                                    
 Argentina peso (interbank)       8.1100     -0.03    -19.94
                                                    
 Argentina peso (parallel)         11.57      0.61    -13.57
                                                    
 
 (Reporting by Priscila Jordao and Asher Levine Editing by W
Simon)
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