March 25, 2014 / 4:50 PM / 4 years ago

EMERGING MARKETS-Brazil markets shrug off S&P downgrade, focus on U.S. data

By Walter Brandimarte
    RIO DE JANEIRO, March 25 (Reuters) - Brazilian stocks and
currencies gained along with other Latin American markets on
Tuesday as investors shrugged off a downgrade of Brazil's credit
rating and focused instead on encouraging U.S. consumer
confidence data.
    The Brazilian real rose 0.5 percent after falling
slightly in the beginning of the session in a knee-jerk reaction
to Standard & Poor's decision late on Monday to cut Brazil's
credit rating to BBB-minus, its lowest investment grade level.
    Even as the timing of the downgrade took some Brazilian
policymakers by surprise, financial markets were unfazed by a
move they had broadly priced in. 
    "It is like a student who knows he didn't do well in the
exams," said Tarcisio Rodrigues, a director at Banco Paulista in
Sao Paulo. "The downgrade only confirmed what was expected."
    Brazil's benchmark Bovespa index initially rose 0.9
percent as investors focused on data showing U.S. consumer
confidence rose in March to its highest level in more than six
    Market enthusiasm abated later, however, as key Wall Street
indexes also erased most of their gains. As the S&P 500 index
 traded nearly flat, the Bovespa was only marginally
higher while Mexico's IPC index dipped into negative
    Shares of Brazil's JBS SA, the world's largest
meat producer by sales, slumped more than 5 percent after it
missed analysts expectations for its fourth-quarter profit due
surging operating costs. 
    On the other hand, shares of Brazil's Vale SA 
rose more than 1 percent as analysts bet the world's largest
iron ore producer could benefit from exports to China if
expectations that Beijing will act to support the country's
economic growth prove correct.   
    Most Latin American markets had gained on Monday on
speculation that China would unveil fresh stimulus measures to
counter a weaker-than-expected performance of its manufacturing
sector in the first quarter of the year.

    Key Latin American stock indexes and currencies at 1635 GMT:

 Stock indexes                        daily %    YTD %
                       Latest         change     change
 MSCI Emerging         958.45         0.48       -4.87
 MSCI LatAm            3037.58        1.01       -6.05
 Brazil Bovespa        48179.55       0.39       -6.46
 Mexico IPC            39712.36       -0.27      -7.06
 Chile IPSA            3681.46        0.62       -0.48
 Chile IGPA            18239.33       0.5        0.07
 Argentina MerVal      6152.25        1.07       14.12
 Colombia IGBC         13264.62       0.99       1.48
 Peru IGRA             14403.21       0.43       -8.57
 Venezuela IBC         2332.32        0          -14.77
 Currencies                           daily %    YTD %
                              Latest  change     change
 Brazil real           2.3045         0.74       2.27
 Mexico peso           13.1385        0.32       -0.83
 Chile peso            559.2          0.77       -5.92
 Colombia peso         1977.22        0.90       -2.29
 Peru sol              2.815          0.00       -0.78
 Argentina peso        8.0000         -0.31      -18.84
 Argentina peso        10.85          0.92       -7.83

 (Additional reporting Bruno Federowski in Sao Paulo; Editing by
Meredith Mazzilli)
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