Bonds News

EMERGING MARKETS-Brazil markets cheer Senate vote on pension reform

 (Updates market price)
    By Susan Mathew
    Oct 23 (Reuters) - Brazil stocks scaled new highs and the
real currency jumped 1% on Wednesday after the Senate approved a
crucial pension reform bill, while Chilean markets weakened
ahead of a central bank decision on interest rates amid severe
domestic unrest. 
    Brazil's Senate approved the main text of the government's 
landmark pension reform proposal late on Tuesday. Once voting to
approve the last four amendments concludes on Wednesday, the
bill will be cleared to be signed into law.
    The reform is seen by the government and many economists as
crucial to stabilizing Brazil's public finances and restoring
business confidence, conditions they say will lead to stronger
and more sustainable growth in Latin America's largest economy.
    The benchmark Bovepsa stock index rose to a new
all-time high, led by banking shares and a 4% gain in electric
engineering company WEG SA after it reported results.
    The real added another 1% to hit a near 7-week high. 
    "Markets had already priced in the passage of reforms," said
Elisabeth Andreae, EM analyst at Commerzbank.
    She warned of limited appreciation potential for the
currency as there are other urgently needed reforms and markets
are a bit skeptical about their passage as they may face strong
    In Chile, the peso lost 0.3%, while stocks
shed 1.7% ahead of its central bank decision on monetary policy.
Analysts expect a steeper interest rate cut as Latin America's
fifth-largest economy saw violent protests against low wages and
a high cost of living.
    Chile's state miner Codelco, the world's top copper
producer, said one of its mines was shut and operations at a
smelter drastically reduced amid the general strike.

    A Reuters poll from early October showed the central bank is
expected to cut rates by a quarter-percentage basis point to
1.75%, while the recent turn of events have spurred bets of a
deeper rate cut.
    "Recent domestic events should support (the central bank's)
easing bias," analysts at Morgan Stanley said in a note.
    "While we think that a 50bp cut is possible in today's
decision, we don't see it as the base case and think that the
governing board would prefer to leave the door wide open for
further cuts."
    Most other regional currencies made minor moves against a
steady dollar, while stock markets were mixed with Mexico's IPC
index gaining 0.2% and Colombian stocks dropping

    Key Latin American stock indexes and currencies at 1955 GMT:
        Stock indexes                  Latest       Daily %
 MSCI Emerging Markets                    1032.08       -0.19
 MSCI LatAm                               2787.36        0.85
 Brazil Bovespa                         107528.29        0.14
 Mexico IPC                              43453.25        0.21
 Chile IPSA                               4910.54       -1.65
 Argentina MerVal                        32661.25      -1.808
 Colombia IGBC                           13053.62       -0.58
           Currencies                  Latest       Daily %
 Brazil real                               4.0360        0.94
 Mexico peso                              19.1135        0.15
 Chile peso                                 725.8       -0.28
 Colombia peso                            3391.36        1.11
 Peru sol                                   3.345        0.12
 Argentina peso (interbank)               58.9900       -0.49
 (Reporting by Susan Mathew and Sruthi Shankar in Bengaluru;
Editing by Alistair Bell)