February 5, 2020 / 3:23 PM / 23 days ago

EMERGING MARKETS-Latam assets gain for a third session; real flat before rate decision

    * Reports of coronavirus treatment buoy risk appetite 
    * Brazil's central bank to deliver modest rate cut -poll 
    * Chilean peso firms as copper jumps to one-week high 
    * Argentina's Buenos Aires averts falling into default 

    By Shreyashi Sanyal
    Feb 5 (Reuters) - Latin American assets rose for a third
straight session on Wednesday, as investors took comfort from
China's efforts to ease the impact of a deadly virus outbreak,
while Brazil's real remained rangebound ahead of a central bank
decision.
    Beijing's tight containment measures, along with the
billions of dollars pumped into markets by Chinese authorities
helped investors regain appetite for riskier assets in the
emerging markets space. 
    Most emerging market assets have been hit by fears over the
potential economic impact in the near-term of the fast-spreading
coronavirus outbreak, which has killed nearly 500 people so far.
 
    Still, some worries were soothed following a report that a
Zhejiang University team had found drugs that could inhibit the
coronavirus in certain experiments.
    "Stock markets are positive... while gold is trending down,
all driven by news on an advance on the development of
'coronavirus' vaccine, as well as improvements in the detection
speed," analysts at Grupo Financiero Banorte wrote in a note. 
    Brazil's real traded flat against the greenback as
local investors awaited a decision from Latin America's no.1
economy's central bank, with expectations of a modest amount of
monetary stimulus to support a still-sluggish economic recovery.

    The central bank has made four deep cuts to its benchmark
rate since the second half of 2019. 
    "We expect Copom to reduce the Selic rate by 25bps today to
a new record low level (4.25%), but potentially keep the door
open for another cut in March," Dirk Willer, head of emerging
market strategy at Citi Research, and Kenneth Lam, an emerging
markets FX strategist, wrote in a note.    
    MSCI's index for Latin American stocks
climbed more than 1%, with Sao Paolo stocks leading
gains. 
    Brazil's second-largest private lender Banco Bradesco SA
 jumped 4% after it reported a 14% rise in
fourth-quarter recurring net income from a year earlier but
issued a more cautious outlook for 2020.
    In Argentina, its Buenos Aires province narrowly averted
falling into default on Tuesday, saying it would make a $277
million payment on a 2021 bond after creditors would not grant a
last-minute approval to delay it.
    The country's peso currency eased slightly on
Wednesday. 
    The Chilean peso firmed against the dollar as prices
of copper, the country's main export, rebounded to their highest
level in more than a week.
    
    Key Latin American stock indexes and currencies at 1458 GMT
    Stock indexes                 Latest       Daily % change
 MSCI Emerging Markets                1092.71             0.67
                                               
 MSCI LatAm                           2861.64             1.17
                                               
 Brazil Bovespa                     117312.19             1.52
                                               
 Mexico IPC                          45464.21             0.93
                                               
 Chile IPSA                           4676.63             0.16
                                               
 Argentina MerVal                    41175.28            0.345
                                               
 Colombia IGBC                        1655.94             0.73
                                               
                                                              
        Currencies                Latest       Daily % change
 Brazil real                           4.2496             0.19
                                               
 Mexico peso                          18.5949             0.34
                                               
 Chile peso                               775             0.81
                                               
 Colombia peso                           3349             0.33
 Peru sol                              3.3558             0.18
                                               
 Argentina peso                       60.5700             0.03
 (interbank)                                   
                                               
 

 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by
Bernadette Baum)
  
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