EMERGING MARKETS-Latam currencies up on Fed statement; Argentina bonds slide

Wed Jun 18, 2014 3:56pm EDT

(Updates with Fed statement, Argentina developments, new quote)
    SAO PAULO, June 18 (Reuters) - Latin American currencies
strengthened on Wednesday while stocks rose after the U.S.
Federal Reserve's policy statement upped investor expectations
that monetary stimulus could remain accommodative for longer.
    Meanwhile, Argentina debt prices pared early losses after a
lawyer representing the country said negotiations would be held
between the South American nation and holdout creditors.
    The Federal Reserve on Wednesday hinted at a slightly faster
pace of interest rates increases starting next year, but
suggested rates in the long-run would be lower than it had
indicated previously. The bank also slashed its forecast for
U.S. economic growth this year. 
    "A lower growth projection for 2014 could be a more dovish
signal, removing some of the perception that the economy and
inflation had already put the Fed on alert (for a sooner
increase in interest rates)," said Jankiel Santos, chief
economist with Espirito Santo Investment Bank in Sao Paulo. 
    Stock markets rose across the region, with the MSCI Latin
American stock index posting its biggest gain in
nearly two weeks.
    Brazil's Bovespa index erased the previous two
sessions' losses, driven by widely-traded shares such as oil
producer Petroleo Brasileiro SA, known as Petrobras,
and lender Itau Unibanco SA, both of which tend to
track the outlook for global liquidity. 
    While Argentine stocks also rose, its bonds fell
after Economy Minister Axel Kicillof said on Tuesday the country
is taking steps to swap bonds governed by U.S. law for those
governed by Argentine law so they would not be subject to U.S.
courts that have made paying existing bondholders more
difficult. 
    The move comes after the U.S. Supreme Court left intact
lower court rulings ordering the country to pay holdout
creditors who had declined to accept the government's settlement
after a 2001 default. 
    Bond prices pared losses later in the afternoon after a
lawyer for the country said Argentine officials will begin to
negotiate with the holdouts for the first time next week.
 
    Argentina's dollar-denominated 2017 Global bond
 pared early losses though it remained about 0.69
points lower to bid 81.70 with the yield at 16.89 percent,
according to Thomson Reuters data. Its dollar-denominated
discount bonds due in 2033 also pared losses,
dropping 0.8 points in price to 72.63 cents to yield 12.42
percent.
    
    Key Latin American stock indexes and currencies at 1935 GMT:
    
 Stock indexes                    Latest    daily %  YTD %
                                            change   change
 MSCI Emerging Markets            1047.16   0.35     4.07
                                                     
 MSCI LatAm                       3416.83   2.06     4.6
                                                     
 Brazil Bovespa                   55098.11  1.47     6.97
 Mexico IPC                       42773.16  0.38     0.11
 Chile IPSA                       3859.47   0.83     4.33
 Chile IGPA                       18843.9   0.62     3.38
 Argentina MerVal                 7735.55   3.04     43.49
 Colombia IGBC                    14223.88  -0.07    8.82
 Peru IGRA                        16392.49  0.41     4.06
 Venezuela IBC                    2154.35   -0.14    -21.28
                                                     
 Currencies                       Latest    daily %  YTD %
                                            change   change
 Brazil real                      2.2272    1.27     5.82
 Mexico peso                      12.972    1.14     0.45
 Chile peso                       558.2     0.27     -5.75
 Colombia peso                    1889      0.69     2.28
                                                     
 Peru sol                         2.799     0.14     -0.21
 Argentina peso (interbank)       8.1275    0.03     -20.12
                                                     
 Argentina peso (parallel)        12.2      0.41     -18.03
                                                     
 
 (Reporting by Asher Levine and Bruno Federowski; editing by G
Crosse and Nick Zieminski)
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