May 16, 2018 / 3:53 PM / 4 days ago

EMERGING MARKETS-Argentine peso, stocks recover after Lebac note auction

    SAO PAULO/BUENOS AIRES, May 16 (Reuters) - Argentina's stock
market and peso currency climbed on Wednesday after the central
bank held a successful auction of its Lebac notes a day earlier,
indicating the country had calmed investor jitters at least
temporarily.
    Late on Tuesday, Argentina's central bank sold 620.93
billion pesos ($26 billion) of short-term Lebac securities at
its monthly auction, compared with about 616 billion pesos'
worth of securities that matured. That came after the central
bank raised the interest rate on the security to about 40
percent, up from 26.3 percent previously.
    In recent weeks, the Argentine peso has deteriorated
rapidly, spurring the nation to seek a financing agreement from
the International Monetary Fund. On Monday, the currency fell
some 6 percent, hitting an all-time low.
    On Tuesday, however, the peso snapped a losing streak,
closing up 3.73 percent after the central bank sold $791 million
on the spot market. 
    On Wednesday, the rally continued after the Lebac auction,
with the peso up 0.84 percent at 23.9 to the dollar
in midday trade and the benchmark Merval index up 1.44
percent.
    Still, the recovery remains fragile as weak fundamentals,
Argentina's drought-hit soy harvest, and various other issues
weigh. Futures contracts have the peso trading some 28.9 to the
dollar at the end of the year.
    "The government won the battle, but not the war," said
Fausto Spotorno, director of research at Orlando Ferreres y
Asociados in Buenos Aires.
    Elsewhere in the region, Brazil's benchmark Bovespa index
 led gains, climbing some 1.77 percent by midday.
    Among the reasons traders cited for the rise were
expectations of further cuts in the nation's benchmark Selic
rate, driven by weak economic growth figures revealed on
Wednesday morning. The index was also supported by a flurry of
positive corporate news reports and traders buying back into
stocks that registered severe losses in recent days and weeks.

    Education company Estacio Participacoes SA
climbed some 9.6 percent after posting losses of at least 7
percent in two of the last three sessions. 
    State-run utility company Cia Energetica de Minas Gerais SA
, known as Cemig, climbed 4.4 percent after the
company posted solid quarterly results, and announced new
developments in its plans to sell telecommunications assets and
a transmission unit.
    
Key Latin American stock indexes and currencies at 1507 GMT:
    
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1154.43      0.36     -0.71
                                                  
 MSCI LatAm                    2827.92      0.96     -0.96
                                                  
 Brazil Bovespa               86641.07      1.77     13.40
                                                  
 Mexico IPC                   46345.77      0.19     -6.10
                                                  
 Chile IPSA                    5722.80      0.21      2.84
                                                  
 Chile IGPA                   28941.79      0.27      3.43
                                                  
 Argentina MerVal             31119.91      1.44      3.51
                                                  
 Colombia IGBC                12481.31     -1.02      9.77
                                                  
 Venezuela IBC                21267.16      3.39   1583.67
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.6837     -0.64    -10.06
                                                  
 Mexico peso                   19.7100     -0.06     -0.06
                                                  
 Chile peso                     630.35      0.31     -2.49
                                                  
 Colombia peso                 2871.85      0.08      3.84
 Peru sol                        3.267      0.18     -0.92
                                                  
 Argentina peso                23.9000      0.84    -22.18
 (interbank)                                      
                                                  
 Argentina peso                   24.5      1.22    -21.51
 (parallel)                                       
                                                  
 

 (Reporting by Gram Slattery in Sao Paulo and Walter Bianchi in
Buenos Aires; Editing by Tom Brown)
  
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