(Adds Brazilian yield curve inverting)
SAO PAULO, Aug 27 Brazil's Bovespa stock index
rose to its highest in 19 months on Wednesday after polls showed
President Dilma Rousseff might lose her re-election bid in
October, while the yield curve on benchmark interest-rate
contracts inverted on bets the next president will be tougher on
The broader MSCI Latin American stock index
rose to its highest level in over two weeks, while regional
currencies were mixed.
A widely watched poll released on Wednesday showed Rousseff
losing to environmentalist Marina Silva in an expected runoff,
echoing the results of another poll released late on Tuesday.
Many investors have accused Rousseff of mismanaging the
economy and criticized her for enacting policies detrimental to
minority shareholders of state-run companies such as oil
producer Petroleo Brasileiro SA, known as Petrobras.
Petrobras preferred shares rose 4.6 percent and are up about
22.5 percent over the past nine sessions as Rousseff's chances
continued to dim.
The index was also boosted by telecommunications companies
Grupo Oi SA and TIM Participacoes SA.
Their shares soared after Grupo Oi announced it hired investment
bank Grupo BTG Pactual SA to advise on a plan to win
control of TIM.
In a rare development, the yield curve inverted as investors
bet the country's next president will initially impose a tighter
fiscal policy to rein in inflation, making room for lower
interest rates in the future.
Yields paid on interest-rate contracts maturing in January
2021 sank 16 basis points to 11.22 percent, less than
the 11.3 percent paid on contracts maturing in January 2017
, or the 11.29 percent paid on contracts that expire in
In currency markets, the Brazilian real strengthened
against the dollar for a second straight day, as traders saw a
non-Rousseff government reducing the country's risk profile.
Chile's peso fell for the second straight session,
partly because of lower copper prices, the country's
Chile's central bank is expected to continue easing next
month, cutting the benchmark interest rate 25 basis points to
3.25 percent, according to the prevailing view of traders in a
central bank poll published on Wednesday.
The Mexican peso strengthened slightly against the
dollar after data showed a rebound in Mexican factory exports in
July, raising hopes for a strengthening recovery in Latin
America's second-largest economy.
Key Latin American stock indexes and currencies at 2040 GMT:
Stock indexes Latest Daily pct YTD pct
MSCI Emerging 1,093.74 0.55 9.08
MSCI LatAm 3,625.24 1.57 13.26
Brazil Bovespa 60,950.57 1.89 18.33
Mexico IPC 45,601 0.3 6.73
Chile IPSA 3,973.31 0.55 7.41
Chile IGPA 19,334.22 0.53 6.07
Argentina MerVal 9,811.97 3.04 82.01
Colombia IGBC 14,567.98 0.8 11.45
Peru IGRA 17,026.95 0.5 8.08
Venezuela IBC 2,596.75 2.47 -5.11
Currencies Latest Daily pct YTD pct
Brazil real 2.2449 0.83 4.98
Mexico peso 13.0837 0.10 -0.41
Chile peso 590 -0.68 -10.83
Colombia peso 1929.5 0.13 0.13
Peru sol 2.847 -0.39 -1.90
Argentina peso 8.4000 0.06 -22.71
Argentina peso 14.33 -0.91 -30.22
(Reporting by Bruno Federowski, writing and additional
reporting by Asher Levine.; Editing by Jonathan Oatis and Andre