July 24, 2019 / 3:30 PM / a month ago

EMERGING MARKETS-Trade optimism lifts Latam assets; Brazil markets cheer stimulus

    By Agamoni Ghosh
    July 24 (Reuters) - Latin American assets rose on Wednesday
as investors held on to optimism from U.S.-China trade talks
offsetting concerns of slowing global growth, while a new policy
to control Brazil's fiscal woes and provide stimulus to the
economy boosted sentiment.
    White House economic adviser Larry Kudlow said on Tuesday it
was a good sign that top U.S. officials would travel to China to
discuss reviving stalled trade talks. 
    The latest impact of the protracted trade war was reflected
in the weak manufacturing PMI data from Eurozone, Japan and U.S.
earlier in the day but increased the bets for the European
Central Bank to cut interest rates on Thursday.  
    MSCI's index of Latin American stocks and
currencies rose with Brazilian assets
 leading gains as the government's latest move to
cut worker protections and boost job creation lifted sentiment. 
    Brazil's Presidential Chief of Staff Onyx Lorenzoni said 
that workers will now be able to withdraw up to 500 reais
($132.00) from their FGTS - a severance fund designed for
employees to prevent firms from firing them.
    The announcement comes after Jair Bolsonaro-led government
said the fund had made businesses unwilling to hire, thus
increasing unemployment in an already fragile economy.    
    "It's a relatively small-scale package but its one more
measure that should help in accelerating the process of
stimulating the economy," said Gustavo Rangel, chief economist
LATAM, ING. 
    Brazil's economy is struggling to emerge from a crippling
recession with Bolsonaro's government focused on passing a key
pension overhaul that is expected to prop up public finances and
kick-start growth. 
    Mexican stocks moved 0.8% higher while the peso
 was on track to break a three-day losing streak after
data showed consumer prices rose 0.27% during the first half of
July, slightly beating expectations. 
    Among stocks, Grupo Mexico rose over 3% after
the mining and transport firm reported a net profit of $490.9
million for the second quarter, up 21.9% from the same period
last year.
    Argentina's peso was the prominent loser, down 0.9%
after ratings agencies Moody's said the country's weak economy
and policy uncertainty pose risks. 
    This comes a day after the IMF said it expected a slightly
deeper-than-expected recession in Argentina in 2019 and a slower
recovery in 2020.

 Key Latin American stock indexes and currencies at 1500 GMT
 Stock indexes                                   daily %
                             Latest               change
 MSCI Emerging Markets              1055.29        -0.02
                                             
 MSCI LatAm                         2909.06         0.75
                                             
 Brazil Bovespa                   104440.32         0.71
                                             
 Mexico IPC                        41274.68         0.83
                                             
 Chile IPSA                         4995.97        -0.03
                                             
 Argentina MerVal                  39469.06         0.68
                                             
 Colombia IGBC                     12990.52        -0.14
                                             
                                                        
 Currencies                                      daily %
                                     Latest       change
 Brazil real                         3.7576         0.39
                                             
 Mexico peso                        19.0977         0.39
                                             
 Chile peso                           692.6         0.06
                                             
 Colombia peso                      3187.73        -0.02
 Peru sol                             3.291         0.12
                                             
 Argentina peso (interbank)         42.8200        -0.93
                                             
 

 (Reporting by Agamoni Ghosh in Bengaluru
Editing by Chizu Nomiyama)
  
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