April 27, 2018 / 11:36 PM / in 10 months

EMERGING MARKETS-Argentina surprises with hike; Mexico, Brazil FX gain

 (Recasts with Argentina rate hike)
    April 27 (Reuters) - Argentina's central bank surprised
markets on Friday by hiking its key interest rate and
intervening with dollar sales to support its peso, while
Mexico's and Brazil's currencies gained ground after steep,
recent losses.
    Argentina's central bank unexpectedly raised its key rate by
3 percentage points to 30.25 percent after the Argentine peso
slumped to an all-time low.
    The bank said it sold $1.38 billion on the spot market on
Friday. The moves helped the currency rocket back
from its low to close little changed on the day.
    Analysts said the market had been doubting that the central
bank would hike interest rates while the government pushes
policies aimed at spurring economic growth ahead of President
Mauricio Macri's expected 2019 re-election bid. 
    Mexico's peso and Brazil's real firmed after mixed U.S.
economic data drove investors to pare back bets on a faster pace
of U.S. interest rate hikes.
    The U.S. economy slowed in the first quarter as growth in
consumer spending braked sharply, though labor costs increased
more than expected in the period.
    "Consumer spending was weak, despite a strong overall
reading. We'll need more clues to justify the recent growth of
rate hike bets," said Mauriciano Cavalcante, the head of
currency trading at Ourominas.
    Emerging market currencies have slumped in recent weeks due
to expectations of accelerating inflation and a widening fiscal
deficit that could drive the U.S. Federal Reserve to accelerate
policy tightening. That would likely dampen demand for
high-yielding assets.
    The Mexican peso firmed 0.8 percent, while the
Brazilian real gained 0.4 percent.
    Brazil's and Mexico's benchmark stock indexes were little
changed, but shares of some companies made big moves following a
 batch of corporate updates.
    Shares in Mexican broadcaster Grupo Televisa
rose more than 4 percent after it reported stronger sales and
said it is considering spinning off assets, particularly its
cable division.
    Rival cable television provider Megacable 
jumped over 7 percent, its biggest one-day percentage gain in
five years, after its report beat expectations.  
    Mexico's Jose Cuervo, the world's largest
tequila producer, fell more than 6 percent after publishing
disappointing U.S. sales numbers. It was the stock's biggest
one-day loss since it listed early last year.
    Shares of Brazil's GPA SA jumped 3.95 percent
after the food retailer beat first-quarter profit estimates on
Thursday, fueled by a strong performance by its wholesale unit.

    Key Latin American stock indexes and currencies at 2100 GMT:
 Stock indexes                              daily %    YTD %
                                             change   change
 MSCI Emerging Markets             1156.30     1.05    -0.19
 MSCI LatAm                        3011.67     0.85     6.49
 Brazil Bovespa                   86444.66     0.07    13.14
 Mexico IPC                       48284.61    -0.03    -2.17
 Chile IPSA                        5690.48     0.19     2.26
 Chile IGPA                       28582.25     0.17     2.15
 Argentina MerVal                 30006.35     1.76    -0.20
 Colombia IGBC                    12421.57     1.23     9.24
 Venezuela IBC                    22380.01     5.24  1671.78
 Currencies                                 daily %    YTD %
                                             change   change
 Brazil real                        3.4614     0.42    -4.28
 Mexico peso                       18.6210     0.83     5.79
 Chile peso                         607.05    -0.79     1.25
 Colombia peso                     2804.21     0.42     6.34
 Peru sol                            3.236     0.00     0.03
 Argentina peso (interbank)        20.5350     0.07    -9.42
 Argentina peso (parallel)           20.83    -0.72    -7.68

 (Reporting by Bruno Federowski; Additional reporting by Michael
O'Boyle in Mexico City and Walter Bianchi in Buenos Aires;
Editing by Dan Grebler and Diane Craft)
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