December 4, 2018 / 2:45 PM / 8 months ago

EMERGING MARKETS-Brazil stocks gain; real firms as U.S. dollar weakens

    By Agamoni Ghosh and Aaron Saldanha
    Dec 4 (Reuters) - Brazil's real firmed against a soft dollar
on Tuesday, as a flattening U.S. Treasury yield curve made
investors worried about a possible recession in the world's top
    As Treasury yields slid, Brazilian brokerage H. Commcor said
the dollar was weakening on sentiment that the Fed would be more
cautious about raising U.S. interest rates.
    U.S. Treasury yields have fallen steadily since the U.S.
Federal Reserve suggested late last week that it may be nearing
an end to its three-year rate hike cycle. 
    The real firmed 0.2 percent, with the country's local
stocks benchmark edging up about 0.3 percent, helped by
gains in most sectors. The index is on track to close the day at
a record closing high.
    Mexico's peso weakened 0.6 percent. Some investors
were not fully convinced by a government proposal on Monday to
buy back some debt tied to a canceled airport project.

    New President Andres Manuel Lopez Obrador, who had
campaigned as a leftist, had said Mexico would buy back some of
the debt used to fund the partly built airport, which he had
said was tainted by corruption. 
    His administration's move to cancel the project in October
after a public consultation had triggered a sell-off in the peso
and local stocks. 
    RBC analysts said in a note that markets realized Monday's
announcement does not mean the cancellation will be reversed, an
idea floating among some local media outlets shortly after the
news came out.  
    Meanwhile, Colombia's peso firmed 0.4 percent while
Argentina's peso weakened in early trade.

    Key Latin American stock indexes and currencies at 1425 GMT
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets           1017.30      0.04    -12.22
 MSCI LatAm                      2635.20     -0.25     -6.59
 Brazil Bovespa                 90121.09      0.34     17.96
 Mexico IPC                            -         -         -
 Chile IPSA                      5157.31      0.11      0.11
 Argentina MerVal               32064.67      0.55      6.65
 Colombia IGBC                         -         -         -
 Currencies                                daily %     YTD %
                                            change    change
 Brazil real                      3.8353      0.17    -13.61
 Mexico peso                     20.4700     -0.57     -3.77
 Chile peso                       670.05     -0.19     -8.27
 Colombia peso                   3173.98      0.41     -6.05
 Peru sol                          3.386     -0.15     -4.40
 Argentina peso (interbank)      36.8200     -0.76    -49.48
 (Reporting by Agamoni Ghosh and Aaron Saldanha in Bengaluru,
Additional reporting by Claudia Violante in Sao Paulo; Editing
by David Gregorio)
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