October 2, 2018 / 3:12 PM / 16 days ago

EMERGING MARKETS-Brazil's real firms on election news; Mexican peso slips

    By Susan Mathew and Miguel Gutierrez
    Oct 2 (Reuters) - Brazil's real strengthened on Tuesday
after a poll showed the market-preferred presidential candidate
had clawed back ground, while the Mexican peso slipped for the
first time in five days, in line with global risk aversion due
to concerns over Italy.
    The real was up 1.5 percent after an opinion poll
showed that a likely presidential election second-round run-off
would result in a tie between Jair Bolsonaro and leftist Workers
Party candidate Fernando Haddad, rather than a loss for
Bolsonaro as investors had feared.
    The real is expected to be particularly susceptible to
election news ahead of the first round vote this weekend.
    "Apparently the tide seems to have started to turn for
Bolsonaro," Guide brokerage said in a research note. "Many were
starting to forecast that Bolsonaro wasn't going to improve in
the polls ... But yesterday's numbers showed a turnaround."
    The benchmark Bovespa index was higher, bolstered by
a 5.4 percent rise in energy company Petrobras as oil
prices hovered near a four-year top.
    Brazil was an outlier among emerging markets, which were hit
by a firming dollar and worries about a slowdown in Chinese
manufacturing as well as anti-euro comments by a senior official
of Italy's ruling League party.
    The Mexican peso weakened, with analysts saying
relief over the NAFTA deal being salvaged would be replaced by
questions over the new agreement, now called United
States-Mexico-Canda (USMCA).
    "Much of this depreciation of the currency is explained by
the global sentiment of risk aversion due to the issue of Italy
and the technical rebound yesterday," CI Banco said in a note.
    On Monday, the peso rallied after the deal was struck, but
pared gains late in the session. Analysts at Banco Base said
investors would remain cautious until they saw details of the
agreement, especially full implications of the parallel letter
or the "insurance" for Mexico in case Washington imposes tariffs
on automotive sector imports.
   Argentina's peso rallied for a second day, up 3.6
percent ahead of the central bank's impending sale of another
round of high-yielding short-term debt aimed at easing inflation
by mopping up excess liquidity.
    
    Key Latin American stock indexes and currencies at 1455 GMT:
    
 Stock indexes                                                    daily %  YTD % change
                                         Latest                    change  
 MSCI Emerging Markets                             1032.06          -1.37         -9.67
 MSCI LatAm                                        2620.96           2.21         -9.33
 Brazil Bovespa                                   81150.54           3.21          6.22
 Mexico IPC                                       49570.96          -0.54          0.44
 Chile IPSA                                        5314.34            0.3          0.30
 Argentina MerVal                                 33092.82           1.56         10.07
 Colombia IGBC                                    12457.13           -0.8          9.56
                                                                                       
 Currencies                                                       daily %  YTD % change
                                                    Latest         change  
 Brazil real                                        3.9603           1.45        -16.34
 Mexico peso                                       18.7910          -0.44          4.83
 Chile peso                                            660          -0.30         -6.87
 Colombia peso                                     3000.99          -0.13         -0.63
 Peru sol                                            3.313          -0.18         -2.29
 Argentina peso (interbank)                        38.1000           3.81        -51.18
                                                                           
 Argentina peso (parallel)                           38.25           3.92        -49.73
                                                                           
 
 (Reporting by Susan Mathew in Bengaluru and Miguel Gutierrez
and Michael Scott O'Boyle;)
  
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