March 17, 2014 / 3:10 PM / in 4 years

EMERGING MARKETS-Latam stock markets rally, tracking global equities

By Asher Levine
    SAO PAULO, March 17 (Reuters) - Latin American stock markets
tracked global equities markets higher on Monday as investors
awaited the next steps in the standoff between Western powers
and Russia over the future of Crimea.
    The MSCI Latin American stock index rose for
the first session in four, adding 1.04 percent and erasing the
previous session's loss.
    Bourses in Brazil, Chile and Mexico had fallen in recent
days as investors feared tensions centered around a referendum
over the Crimea region's political allegiance would stoke
violence and economic turbulence.
    While the referendum was held on Sunday without major
violence, it remains to be seen whether the European Union and
the United States will escalate economic sanctions far enough to
weaken Russia, which could retaliate by cutting its energy
exports to the West. 
    "It seems as if markets had already anticipated these
developments," said Luciano Rostagno, chief strategist with
Banco Mizuho in Sao Paulo. "The market is on hold, waiting to
see what Putin will say and what the West's reaction will be."
   On Wall Street, U.S. stocks rose more than 1 percent on
Monday and European stocks were also higher.  
    Brazil's benchmark Bovespa stock index bounced off
over 8-month lows hit in the previous session, led mostly by
bank shares. 
    Chile's IPSA index gained slightly, led by a 3.4
percent rise in shares of fertilizer and lithium producer SQM
    Mexico's stock market was closed for a local holiday.
    Brazil's real was mostly unchanged from Friday's
close, while the Colombian and Mexican pesos  both
strengthened slightly. Chile's peso gained about 0.5
percent against the dollar, boosted by a rise in the price for
copper, the country's main export.
    Yields on Brazilian interest rate futures ticked
higher across the curve after a weekly central bank poll showed
economists raised their forecasts for year-end inflation to 6.11
percent from 6.01 percent a week earlier.
    "In the short term there is a worse outlook on inflation and
some in the market have been skeptical about the government's
finances," said Alfredo Barbutti, chief economist with BGC
Liquidez in Sao Paulo.
    Brazil's social security deficit this year was
underestimated by about 10 billion reais ($4.3 billion) by the
government, Social Security Minister Garibaldi Alves told local
newspaper Valor Economico on Monday, raising questions about the
country's ability to meet its fiscal savings target this year.
    Key Latin American stock indexes and currencies at 1426 GMT:
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets            943.88      0.66     -6.48
 MSCI LatAm                      2860.43      1.04    -11.56
 Brazil Bovespa                 45391.33      0.95    -11.87
 Mexico IPC                     37950.97        --    -11.18
 Chile IPSA                      3624.29      0.35     -2.02
 Chile IGPA                     17945.59      0.31     -1.54
 Argentina MerVal                5800.68      0.93      7.60
 Colombia IGBC                  13045.42      0.43     -0.20
 Peru IGRA                      14754.21     -0.34     -6.34
 Venezuela IBC                   2637.48         0     -3.62
 Currencies                                daily %     YTD %
                                            change    change
 Brazil real                      2.3470      0.15      0.42
 Mexico peso                     13.1745      0.27     -1.10
 Chile peso                        569.6      0.33     -7.64
 Colombia peso                   2033.75      0.40     -5.00
 Peru sol                          2.804     -0.04     -0.39
 Argentina peso (interbank)       7.9050     -0.06    -17.87
 Argentina peso (parallel)          10.8      1.39     -7.41
    GRAPHIC on emerging market FX performance 2014:GRAPHIC on MSCI emerging index performance 2014:-------------------------------------------------------------->
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