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EMERGING MARKETS-Brazil stocks hit all-time high on economic optimism
October 5, 2017 / 4:46 PM / in 2 months

EMERGING MARKETS-Brazil stocks hit all-time high on economic optimism

    By Bruno Federowski
    SAO PAULO, Oct 5 (Reuters) - Brazil's benchmark stock index
on Thursday broke above the 78,000-point level for the first
time ever, boosted by the outlook for an accelerating economic
recovery and low interest rates.
    The Bovespa rose as much as 1.9 percent to 78,024, a
new all-time high, extending the index's gains so far this month
to 5 percent. Signs that Latin America's largest economy is
emerging faster than expected from the deepest recession in a
century have boosted demand for Brazilian assets.
    Low inflation has also allowed Brazil's central bank to
slash interest rates, with traders all but convinced they will
fall to record lows this year, heightening the allure of stocks.
    Economists at Itaú Unibanco on Thursday revised their
estimates for gross domestic product growth in 2018 to 3 percent
from 2.7 percent, saying the benchmark Selic interest rate is
likely to fall to 6.5 percent.
    Shares whose performance is closely tied to economic growth,
such as financials and utilities, led the
rally. State-controlled oil company Petróleo Brasileiro SA
 also rose as expectations that major producers could
cut output next year lifted crude prices.
    The Brazilian real, however, was nearly flat as
traders avoided big bets ahead of the release of key U.S. jobs
data on Friday. 
    Other Latin American currencies, such as the Mexican
 and Chilean pesos, also seesawed.
    New U.S. employment figures could help traders adjust their
bets over the pace of Federal Reserve interest rate increases in
the coming months.
    The U.S. central bank has signaled it will hike rates in
December, potentially reducing demand for higher-yielding
assets, but many investors expect it to take its time going
forward as inflation remains stubbornly below its 2 percent
target.
    
    Key Latin American stock indexes and currencies at 1625 GMT:
 Stock indexes                      Latest     Daily   YTD pct
                                                pct    change
                                              change   
 MSCI Emerging Markets              1,104.21     0.22    27.78
 MSCI LatAm                         3,021.60     0.78     28.1
 Brazil Bovespa                    77,608.81     1.33    28.86
 Mexico S&P/BVM IPC                50,826.03     0.52    11.36
 Chile IPSA                         5,442.11    -0.15    31.09
 Chile IGPA                        27,227.96    -0.07    31.32
 Argentina MerVal                  26,820.01      1.3    58.53
 Colombia IGBC                     11,102.47      0.2     9.62
                                                              
 Currencies                         Latest     Daily   YTD pct
                                                pct    change
                                              change   
 Brazil real                          3.1329    -0.07     3.71
 Mexico peso                         18.3040    -0.22    13.33
 Chile peso                           627.95     0.60     6.81
 Colombia peso                      2,923.71     0.32     2.66
 Peru sol                              3.254     0.15     4.92
 Argentina peso (interbank)          17.3300     0.17    -8.40
                                                       
 Argentina peso (parallel)             17.75     0.39    -5.24
                                                       
 
 (Reporting by Bruno Federowski, editing by G Crosse)
  

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