EMERGING MARKETS-Brazil, Chile currencies gain with China; Argentina rallies

Mon Jun 23, 2014 1:51pm EDT

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RIO DE JANEIRO, June 23 (Reuters) - The currencies of Brazil
and Chile gained about 0.6 percent on Monday following strong
Chinese factory data, while Argentine markets rallied as
President Cristina Fernandez prepared to negotiate with holdout
creditors who did not accept the country's debt restructuring of
2005 and 2010.
    Meanwhile, Brazilian stocks led losses among Latin American
peers after a survey showed economists further cut their
forecasts for the country's economic growth this year.
    The Brazilian real  and the Chilean peso 
rose 0.6 percent and 0.7 percent, respectively, after data
showed the Chinese factory sector expanded in June for the first
time in six months, improving the outlook for commodities
exports from Latin America. 
    "The positive Chinese data is prevailing today, boosting
commodity-related currencies," said Luciano Rostagno, chief
strategist with Banco Mizuho in Sao Paulo.
    He noted, however, that trading volumes were lower than
usual as Brazilian financial markets closed early, before the
nation's soccer team plays Cameroon at the World Cup at 2000
GMT.
    While Brazil's foreign exchange market closed at 1600 GMT,
the BM&FBovespa exchange shut down stock trading at 1730 GMT.
    
    ARGENTINE BONDS RALLY
    Argentina's global 2033 bonds soared 13
percent in price to bid 88.745 to the dollar after Fernandez on
Friday reversed her long-held policy of shunning negotiations
with holdouts, raising hopes that Argentina may avoid yet
another debt default. 
    A U.S. judge has ruled that Argentina can only pay the
holders of its restructured debt if it also pays the holdouts,
but on Monday Economy Minister Axel Kicillof said the country
would ask the U.S. court to temporarily suspend that ruling
while both parts negotiate.    
    "Reaching a mutually agreeable solution will still be
difficult, but the worst-case scenario that Argentina is pushed
into another default does at least seem less likely than a week
ago," David Rees, an emerging markets economist with
London-based Capital Economics, wrote in a research note.
    Argentina's next payment on restructured debt is due June
30. If it does not make that payment on time, it would have a
30-day grace period before falling into technical default.
    Argentina's benchmark Merval stock index gained 7
percent while its currency jumped 6.4 percent on the parallel
market.
    In Brazil, the benchmark Bovespa index fell 0.75
percent as concern about the country's slowing economy weighed
on market sentiment.
    Economists cut their forecasts for Brazil's 2014 economic
growth for a fourth straight week to only 1.16 percent as
industrial output is now expected to decline, according to
weekly central bank poll. 
    
   
    
 Key Latin American stock indexes and currencies at 1735 GMT:
        
 Stock indexes                   daily %    YTD %
                                  change   change
                      Latest              
 MSCI Emerging          1042.63    -0.12     4.11
 Markets                                  
 MSCI LatAm             3398.79     0.04     6.15
                                          
 Brazil Bovespa        54229.46    -0.75     5.29
                                          
 Mexico IPC            42816.68    -0.11     0.21
                                          
 Chile IPSA              3870.7     0.01     4.64
                                          
 Chile IGPA            18901.42    -0.01     3.70
                                          
 Argentina MerVal       7856.94     6.93    45.74
                                          
 Colombia IGBC         14292.35     0.51     9.34
                                          
 Peru IGRA             16644.19     0.02     5.65
                                          
                                                 
 Currencies                      daily %    YTD %
                                  change   change
                         Latest           
 Brazil real             2.2172     0.59     6.30
                                          
 Mexico peso            13.0022    -0.11     0.21
                                          
 Chile peso               552.3     0.65    -4.74
                                          
 Colombia peso           1883.2    -0.04     2.59
                                          
 Peru sol                 2.802     0.11    -0.32
                                          
 Argentina peso          8.1300     0.00   -20.14
 (interbank)                              
                                          
 Argentina peso            11.7     6.41   -14.53
 (parallel)                               
                                          
    

 (Reporting by Walter Brandimarte in Rio de Janeiro, Walter
Bianchi in Buenos Aires and Bruno Federowski in Sao Paulo;
Editing by Meredith Mazzilli)
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