June 11, 2019 / 8:15 PM / 6 days ago

EMERGING MARKETS-Latam stocks hit two-month high, dollar dip supports FX

 (Recasts throughout; updates prices, adds market strategist's
quote)
    By Sruthi Shankar
    June 11 (Reuters) - An index of Latin American stocks
touched a two-month high on Tuesday and currencies in the region
firmed on easing U.S.-Mexico trade tensions and as signs of more
stimulus for China's slowing economy spurred a rally in
commodity prices.
    The MSCI index of Latin American stocks
jumped 1.8%, hitting the highest level since April 12.
    Brazil's Bovespa stock index jumped 1.5%, as iron
ore prices rallied on supply concerns and China's move to boost
funding for major investment projects helped stock prices of
energy and commodity heavyweights.
    Iron ore miner Vale's shares jumped nearly 6%,
posting their biggest percentage gain since Jan. 30.
    Shares in Petroleo Brasileiro SA gained nearly 2%
after Brazil's state-controlled oil company said it had signed a
deal with local antitrust regulator CADE regarding the proposed
sale of some of its refining installations.
    Brazil's real firmed nearly 1% after news the
country's federal budget committee approved a supplementary
credit worth 248.9 billion reais ($64.62 billion) to ensure the
government can make payments for social programs and meet other
expenses.
    The bill, which is expected to be up for a vote in a joint
session of Congress later Tuesday, is a priority for the
government, currently struggling to repair what most economists
call an unsustainable public deficit.
    The gains reflect a rebound for real which was hit on Monday
by political tensions.
    The Mexican peso extended gains after logging its
biggest percentage gain in 2019 on Monday on news that Mexico
and the United States had struck a migration deal that averted
U.S. tariffs of an initial 5% that were set to take effect this
week.
    "Mexican peso definitely benefits from the lowering of trade
tensions and that's probably helping the rest of emerging
markets as well," said Win Thin global, head of currency
strategy at Brown Brothers Harriman in New York.
    "Commodity prices rising is at the margin positive for
stocks."
    The dollar was on the back foot as investors focused on the
upcoming G20 summit for any progress on the U.S.-China trade war
that has weighed on global growth.
    U.S. President Donald Trump said he was ready to impose
another round of tariffs on Chinese imports if no progress is
made in trade talks with Chinese President Xi Jinping at the G20
summit later this month. 
    A bounce in prices of copper - Chile's main export - put its
currency on course to erase Monday's near 1% decline
posted on a surprise 50 basis point rate cut by the central bank
late on Friday.
    The Argentine peso rose 0.4%, while the Merval stock
index jumped 2.7%, inching toward an all-time high hit
in mid-February.
    
  Key Latin American stock indexes and currencies at 1950 GMT:  
 Stock indexes                           daily %
                                Latest    change
 MSCI Emerging Markets         1,032.57     1.03
                                         
 MSCI LatAm                    2,795.73      1.8
                                         
 Brazil Bovespa               98,932.22      1.5
                                         
 Mexico IPC                   43,680.07     0.16
                                         
 Chile IPSA                    5,086.13     1.34
                                         
 Argentina MerVal             37,604.56     3.16
                                         
 Colombia IGBC                12,244.83     0.93
                                         
                                                
 Currencies                              daily %
                                          change
                                 Latest  
 Brazil real                     3.8508     0.85
                                         
 Mexico peso                    19.1295     0.46
                                         
 Chile peso                       692.7     0.95
                                         
 Colombia peso                    3,257    -0.04
 Peru sol                         3.326     0.21
                                         
 Argentina peso (interbank)     44.6950     0.45
                                         
 
 (Additional reporting by Susan Mathew in Bengaluru; Editing by
Will Dunham and Alistair Bell)
  
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