* Progress in U.S. budget talks eases concerns
* Expiration of Brazil options adds to swings
* Bovespa gains 0.37 pct, Mexico's IPC up 0.27 pct
By Asher Levine and Danielle Assalve
SAO PAULO, Dec 17 Latin American stocks edged
higher on Monday as optimism that U.S. lawmakers will avert a
stand-off over the country's budget that could throw the world's
No. 1 economy into recession.
Shares in Brazil and Mexico rose on signs of flexibility in
budget talks between Republican Party leaders and President
Barack Obama on Sunday. Both sides need to reach an agreement to
avert automatic tax hikes and spending cuts that would kick in
Brazil's benchmark Bovespa stock index rose for the
second straight session, while Mexico's IPC index posted
its biggest daily gain in a week.
"The discussions in the U.S. are advancing, but it's
something I don't see getting solved as quickly as the market
would like, and that is leaving investors cautious," said Newton
Rosa, chief economist with asset management firm SulAmerica in
The Bovespa index rose 0.37 percent to 59,822.96, with the
expiration of options on shares contributing to volatility.
The index will find support near 59,000 points and
resistance at 60,000 -- a narrow channel that has bound trading
over the past week -- XP Investimentos analysts wrote in an
investor note on Monday.
Preferred shares of state-controlled oil company Petroleo
Brasileiro SA, known as Petrobras, fell 1.3 percent
as profit-takers took advantage of the stock's 3 percent gain in
the previous session, its biggest daily rise in three months.
Electric utility holding company Energias do Brasil SA
rose more than 2 percent in early trading after the
company's shares were included in a preview of modifications to
Brazil's benchmark Bovespa stock index on Monday. Profit-takers
immediately sold off the shares, however, leading to a 1.5
percent loss later in the session.
The Bovespa is up more than 4 percent in December, its best
monthly performance since February.
"A calming in Europe's debt crisis and the retaking of
growth in the United States reinforces the trend for a gain in
the Bovespa in December," said Bruno Piagentini, an analyst with
brokerage Coinvalores in Sao Paulo.
Mexico's IPC index rose for the second straight session,
adding 0.27 percent to 43,165.10.
A technical indicator known as the relative strength index
hit "overbought" territory however, indicating stocks may be due
to fall in coming sessions.
Cement manufacturer Cemex SA rose more than 3
percent, contributing most to the index's gains, while retailer
Wal-Mart de Mexico added 0.66 percent.
Chile's IPSA index was little changed at 4,260.60,
with a 0.28 percent gain by industrial conglomerate Copec SA
helping offset a 0.4 percent loss by retailer SACI
Latin America's key stock indexes at 1523 GMT:
Stock indexes daily % YTD %
Latest change change
MSCI LatAm 3,734.31 -0.13 3.8
Brazil Bovespa 59,822.96 0.37 5.41
Mexico IPC 43,165.10 0.27 16.42
Chile IPSA 4,260.66 -0.06 1.99
Chile IGPA 20,842.49 -0.06 3.54
Argentina MerVal 2,755.15 2.15 11.88
Colombia IGBC 14,531.48 -0.02 14.73
Peru IGRA 20,177.90 0.15 3.62
Venezuela IBC 474,078.50 -0.03 305.07