August 25, 2014 / 5:35 PM / 3 years ago

EMERGING MARKETS-Brazil stocks gain on election outlook, ECB

SAO PAULO, Aug 25 (Reuters) - Brazil's benchmark Bovespa
stock index tracked global markets higher on Monday, driven by
the outlook for stimulus measures from the European Central Bank
(ECB) and market positioning over the outcome of an upcoming
presidential electoral poll.
    The broader MSCI Latin American stock index 
rose for the seventh session in eight, while the region's
currencies were mostly stable or weaker against the dollar.
    ECB President Mario Draghi on Friday suggested a major shift
in the bank's policy away from a focus on austerity toward
reviving growth, helping boost risk appetite among global
    The Bovespa index erased the previous session's
losses, led by an over 3 percent rise in preferred shares of
state-run oil producer Petroleo Brasileiro SA. 
    Investors were attuned to market chatter about the outcome
of an electoral poll due to be released this week. The market
typically rises when President Dilma Rousseff loses support, as
investors have been critical of her administration's management
of the economy and state-run companies in particular. 
    "There is talk that (opposition candidate) Marina Silva will
gain in the poll," said Ariovaldo Santos, a trader with
H.Commcor in Sao Paulo. "You also have the outlook for stimulus 
in Europe and strong performance in the U.S. market, so we are
riding along on that movement."
    Mexico's IPC index rose 0.27 percent, hitting its
highest level in over six months.
    Foreigners have boosted their bets on equities and fixed
income in Latin America's No. 2 economy, although that was not
enough to avoid a wider current account deficit in the second
quarter, the central bank reported on Monday. 
    In currency markets, the Brazilian real fluctuated
through the morning, though settled slightly weaker against the
dollar in the afternoon. 
    The Chilean and Mexican pesos  were
    The Colombian peso weakened for the ninth straight session,
losing about 0.5 percent against the dollar on Monday.
    "The central bank continues to engage in verbal foreign
exchange intervention with several board members citing concerns
of the impact of (currency) strength on growth and exports,"
wrote Siobhan Morden, head of Latin America strategy at
Jefferies in a client note Monday. "We attribute this foreign
exchange weakness to less supportive policy risk and technicals
that leaves (the peso) vulnerable to the heavy interventionist
    Key Latin American stock indexes and currencies at 1659 GMT:
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets            1083.7      0.06      8.02
 MSCI LatAm                      3536.64      0.79      9.63
 Brazil Bovespa                 59222.94       1.4     14.98
 Mexico IPC                     45499.09      0.27      6.49
 Chile IPSA                      3947.65     -0.06      6.72
 Chile IGPA                     19224.44     -0.05      5.47
 Argentina MerVal               9376.529      2.23     73.93
 Colombia IGBC                  14367.43     -0.06      9.92
 Peru IGRA                       17012.9     -0.14      7.99
 Venezuela IBC                   2573.05      0.55     -5.98
 Currencies                                daily %     YTD %
                                            change    change
 Brazil real                      2.2860     -0.29      3.10
 Mexico peso                     13.1385      0.00     -0.83
 Chile peso                        582.8      0.03     -9.73
 Colombia peso                    1934.6     -0.53     -0.13
 Peru sol                           2.83      0.04     -1.31
 Argentina peso (interbank)       8.4150     -0.12    -22.85
 Argentina peso (parallel)          13.9      0.22    -28.06

 (Reporting by Asher Levine; editing by Andrew Hay)

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