EMERGING MARKETS-Latin American stocks rise on Japan stimulus optimism

(Updates prices)
    By Bruno Federowski
    SAO PAULO, July 11 (Reuters) - Latin American stocks gained
on Monday amid prospects of a fresh stimulus package in Japan,
while the Brazilian real slipped after the central bank's
currency intervention.
    Japanese Prime Minister Shinzo Abe said he ordered a new
round of fiscal stimulus measures after his coalition emerged
victorious from parliamentary elections, steering investors
toward higher-risk assets. 
    His comments added to a bout of bullish sentiment triggered
by stronger-than-expected U.S. jobs data published last Friday.
    MSCI's benchmark EM index climbed more than 2
percent to its highest in 2-1/2 months, while emerging market
dollar bond yield spreads were at the tightest levels in almost
a year.  
    "This resilience of EM bonds can also be explained by the
fact that the fixed-income market is facing what has become a
structural problem: the negative rates in Europe and Japan,"
Regis Chatellier, EM credit strategist at Societe Generale, told
    "In this difficult environment, investors have to find a
source of yield somewhere, and emerging markets clearly appear
as a valid alternative for this," he said.
    Chatellier said he upped his recommendation on emerging
market sovereign debt to "neutral," with big overweight
positions in Colombia and Argentina.
    But the Brazilian real dropped 0.47 percent as the
country's central bank once again intervened to weaken the
currency after staying put on Friday.
    Brazil's benchmark Bovespa stock index rose 1.54
percent, supported by shares of state-controlled oil company
Petróleo Brasileiro SA.
    Analysts at Itaú BBA improved its recommendation for
Petrobras, as the company is known, to "outperform" and
increased their price target to 14 reais from 9 reais.
    "Short- and medium-term challenges remain, but we believe
they have already been mapped out by the market," Itaú BBA
analyst Diego Mendes wrote in a report.
    Key Latin American stock indexes and currencies at 2134 GMT:
 Stock indexes               Latest          Daily   YTD pct
                                               pct    change
 MSCI Emerging Markets            846.73      2.16      6.62
 MSCI LatAm                     2,297.68      1.69     25.57
 Brazil Bovespa                53,960.11      1.54     24.48
 Mexico IPC                    46,177.61      0.95      7.45
 Chile IPSA                     4,034.24      0.23      9.62
 Chile IGPA                    19,944.27      0.23      9.88
 Argentina MerVal              14,977.30      1.95     28.28
 Colombia IGBC                  9,682.69      0.73     13.28
 Venezuela IBC                 11,881.62      0.61    -18.55
 Currencies                       Latest     Daily   YTD pct
                                               pct    change
 Brazil real                      3.3085     -0.47    19.299
 Mexico peso                     18.4725      0.17     -6.73
 Chile peso                        660.7     -0.18      7.42
 Colombia peso                  2,935.35     -0.10      7.97
 Peru sol                           3.28      0.06      4.09
 Argentina peso (interbank)      14.6375      0.60    -11.31
 Argentina peso (parallel)         14.98     -0.53     -4.74
 (Reporting by Bruno Federowski; additional reporting by Sujata
Rao, Paula Arend Laier and Miguel Angel Gutierrez; editing by
Tom Brown and G Crosse)