April 4, 2018 / 11:17 PM / a year ago

EMERGING MARKETS-Politics, trade talk boost Mexico, rattle Brazil

 (Updates prices)
    SAO PAULO, April 4 (Reuters) - Traders in Latin America's
largest equities markets focused on major regional political
developments on Wednesday, with Mexico's benchmark IPC index
 rising and Brazil's Bovespa falling.
    In Mexico, traders said they were encouraged by positive
talk from officials about potentially reaching a preliminary
deal on the North American Free Trade Agreement (NAFTA) in the
near future. The IPC was up 1.6 percent in afternoon trading.
    On Wednesday, Larry Kudlow, U.S. President Donald Trump's
top economic advisor, told reporters he was predicting positive
NAFTA news relatively soon that markets were "going to love."
Top Mexican industrial officials and a U.S. lawmaker directly
involved in the talks also made sanguine statements on Tuesday
and Wednesday.
    In a note, Mexican brokerage Metanalisis said that in
addition to NAFTA optimism, the Mexican market was being
supported by a Bank of America report changing its perspective
on the IPC from "underweight" to "neutral."
    The Mexican market's gains contrasted with the performance
of equities in Brazil, the region's largest economy, where the
Bovespa index had fallen 0.6 percent by the afternoon.
    Traders said the fall reflected a cautious tone in the
market, as the Brazilian Supreme Court resumed hearing former
President Luiz Inacio Lula da Silva's plea to remain out of
prison while he appeals a corruption conviction.
    The leftist leader is Brazil's most popular politician,
despite the conviction and six separate pending corruption
trials, and many market participants see the outcome of the
corruption cases as a risk to the country's economic recovery.
    The Supreme Court is split on his request to be allowed to
exhaust his appeals before beginning to serve a 12-year prison
sentence for taking bribes, and a ruling is expected to hinge on
just one of its 11 justices.
    While losses were well spread across various sectors,
Brazilian stocks exposed to international steel markets were
consistent losers, as the United States and China continue to go
tit for tat in an escalating trade fight, rattling commodities
  Latin American stock indexes and currencies at 1924 GMT:
 Stock indexes              Latest  daily % change  YTD % change
 MSCI Emerging Markets     1155.90           -1.22          1.01
 MSCI LatAm                3032.27           -0.35           7.6
 Brazil Bovespa            84117.3            -0.6         10.10
 Mexico IPC                47437.5            1.61         -3.88
 Chile IPSA                5542.79            0.15         -0.39
 Chile IGPA                27759.8            0.17         -0.79
 Argentina MerVal          31350.8            0.03          4.27
 Colombia IGBC             11736.6            0.64          3.22
 Venezuela IBC             5406.92            2.65        328.05
 Currencies                 Latest  daily % change  YTD % change
 Brazil real                3.3366            0.02         -0.70
 Mexico peso               18.1700            0.27          8.41
 Chile peso                  602.5           -0.03          2.02
 Colombia peso              2785.1           -0.26          7.07
 Peru sol                    3.224           -0.03          0.40
 Argentina peso            20.1775            0.01         -7.82
 Argentina peso              20.55            1.31         -6.42
 (Reporting by Gram Slattery in Sao Paulo and Julia Love in
Mexico City; Editing by Grant McCool and Diane Craft)
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