November 22, 2019 / 3:13 PM / 23 days ago

EMERGING MARKETS-Latam assets rise as U.S.-China trade tensions ease; Brazil's real firms

    * Brazilian real, Mexican peso rise slightly 
    * U.S.-China trade deal "potentially very close" - Trump

    By Shreyashi   Sanyal and Sagarika Jaisinghani
    Nov 22 (Reuters) - Latin American assets edged higher on
Friday as investors turned optimistic about a U.S.-China trade
truce after U.S. President Donald Trump said a deal was
"potentially very close", while Brazil's real firmed on hopes of
more monetary stimulus.
    An index of Latin American currencies gained
0.6%, while a basket tracking the region's stocks
 firmed 1%.
    The Brazilian real rose 0.4% as the country's
inflation fell to the second-lowest level in more than two
decades, a figure likely to give the central bank extra cover to
reduce interest rates again next month.
    Central banks in developing economies have been ahead of the
curve in lowering borrowing costs to combat slowing growth. Last
week, the Mexican central bank cut rates for the third time this
year.
    Mexico's peso edged up against a flat dollar after
data showed annual inflation accelerated slightly more than
expected in the first half of November at an annual rate.

    "We doubt this will be enough to dissuade (Mexican)
policymakers from cutting their key interest rates in December,"
said John Ashbourne, senior emerging markets economist at
Capital Economics. 
    Global stocks also inched up as U.S.
President Donald Trump told Fox News a trade deal with China was
"potentially very close," following remarks from Beijing that it
wanted to work out an initial agreement to halt the prolonged
tariff dispute.
    The mood in financial markets was dulled this week by a
diplomatic row between the world's top two economies after
Washington passed a bill supporting protesters in Hong Kong.
Reuters also reported that the trade deal could slide into 2020.
    The Latin American currency index has fallen about 4% since
its October peak, bogged down by worries over anti-government
protests in Chile and unsuccessful oil auctions in Brazil.
Investors have also kept a close eye on political developments
in Colombia.
    Colombian unions, student groups and other protesters
marched on Thursday against rumored economic reform plans and
amid rising discontent with the government of President Ivan
Duque.
    The Colombian peso had a tepid reaction to the news
as traders pointed to the protests being mostly peaceful. 
    Brazil's stock index rose 0.7% and was on course for
its best week in four. Argentina's MerVal index gained
nearly 1%, while the Mexico stock index inched up 0.1%.
        
Key Latin American stock indexes and currencies at 1455 GMT:
    
      Stock indexes                Latest      Daily %
                                               change
 MSCI Emerging Markets               1047.30       0.26
                                              
 MSCI LatAm                          2706.44        1.1
 Brazil Bovespa                    108240.76       0.69
 Mexico IPC                         43316.02       0.14
 Chile SPIPSA                        4729.90       -0.3
                                              
 Argentina MerVal                   33533.95       0.86
 Colombia COLCAP                     1601.51       0.11
                                              
                                                       
          Currencies               Latest      Daily %
                                               change
 Brazil real                          4.1764       0.37
                                              
 Mexico peso                         19.3620       0.10
                                              
 Chile peso                              795       0.01
 Colombia peso                       3402.47       0.42
 Peru sol                             3.3778      -0.17
 Argentina peso (interbank)          59.7800       0.05
                                              
 
    

 (Reporting by Shreyashi Sanyal and Sagarika Jaisinghani in
Bengaluru
Editing by Alistair Bell)
  
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