July 12, 2017 / 2:57 PM / 3 years ago

EMERGING MARKETS-Brazil stocks, currency up after labor reform approved

    By Bruno Federowski
    SAO PAULO, July 12 (Reuters) - Brazil's stocks and currency
rose on Wednesday after an overhaul of the country's labor laws
cleared a Senate vote by a wider margin than expected,
suggesting lawmaker support for President Michel Temer's reform
platform remained strong.
    The labor bill was passed in a 50 to 26 vote following
approval in the lower house of Congress and will be sent to
Temer to be signed into law.
    The changes, which were opposed by trade unions, give more
leeway to collective bargaining and reduce the scope for legal
action in labor disputes.
    Investors see them as crucial to lift long-term growth in
Latin America's largest economy, as part of a package of
structural reforms that also includes measures to streamline
Brazil's bloated pension system.
    The Brazilian real strengthened 0.6 percent, while
Brazil's benchmark Bovespa stock index advanced 0.4
percent. Wide lawmaker support for the labor bill eased investor
fears that a mounting corruption scandal might have damaged the
outlook for Temer's agenda.
     Shares of state-controlled oil company Petróleo Brasileiro
SA led gains in the index after its board approved an
initial public offering of shares for its fuel distribution
    A ruling by regulator CVM to reverse an earlier decision
ordering Petrobras, as the company is known, to restate
financial statements in recent years also fueled demand for its
    Other Latin American markets also traded higher after
Federal Reserve Chair Janet Yellen indicated that the U.S.
central bank may raise interest rates less than previously
    In a prepared testimony to be delivered to Congress, Yellen
said interest rates "would not have to rise all that much
further" to reach what the Fed considers a neutral rate. A
slower pace of rate hikes would increase the allure of
high-yielding emerging market assets.
    The Mexican peso firmed 0.5 percent, while the
Colombian peso advanced 0.7 percent, Both currencies also
found support in higher crude prices following a decline in U.S.
fuel inventories and a cut in the U.S. government's forecast for
crude output.
    Key Latin American stock indexes and currencies at 1445 GMT:
 Stock indexes                                 daily %   YTD %
                                                change  change
 MSCI Emerging Markets                1029.22     1.08   18.08
 MSCI LatAm                           2642.83     1.07   11.71
 Brazil Bovespa                      64073.54     0.38    6.39
 Mexico S&P/BVM IPC                  50801.73     0.58   11.30
 Chile IPSA                           4931.71     0.75   18.80
 Chile IGPA                          24623.03     0.67   18.76
 Argentina MerVal                    22360.50     1.05   32.17
 Colombia IGBC                       11040.03     0.42    9.00
 Venezuela IBC                      125766.28    -0.11  296.67
 Currencies                                    daily %   YTD %
                                                change  change
 Brazil real                           3.2319     0.61    0.54
 Mexico peso                          17.8185     0.51   16.42
 Chile peso                            663.61     0.44    1.07
 Colombia peso                           3052     0.74   -1.65
 Peru sol                                3.25     0.18    5.05
 Argentina peso (interbank)           16.9650     0.25   -6.42
 Argentina peso (parallel)              17.38     0.23   -3.22

 (Reporting by Bruno Federowski; Editing by Jonathan Oatis)
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