×

EMERGING MARKETS-LatAm currencies jump after weak U.S. data

SAO PAULO, June 14 (Reuters) - Latin American currencies strengthened on Wednesday after weaker-than-expected U.S. economic data further cooled expectations of multiple interest rate hikes in the second half of the year. U.S. retail sales in May recorded their biggest drop in 16 months and consumer prices unexpectedly fell, according to data released hours before the U.S. Federal Reserve published its rate-setting decision. Traders widely expect the U.S. central bank to hike rates by a notch on Wednesday, but a mixed batch of economic figures has cast a shadow on expectations of at least two additional hikes. A slower pace of tightening could sustain demand for emerging market assets, which tend to lure foreign investors with the promise of higher yields. The Brazilian real strengthened 1 percent, the biggest gainer in the region, while the Mexican peso firmed 0.7 percent. Brazil's benchmark Bovespa stock index inched up 0.3 percent, supported by rising shares of Banco Bradesco SA after a federal court cleared the lender's chief executive offices of illegally dodging a tax fine. Strategists at Itaú BBA on Wednesday cut their recommendation for Brazilian stocks to "underweight" from "neutral," saying heightened uncertainty over the fate of a proposed pension reform is likely to lead to higher funding costs and a weaker currency. Strategists upgraded their recommendation on Mexican shares to "overweight" on forecasts of stronger earnings growth, but warned of potential volatility around the 2018 presidential elections and coming NAFTA negotiations.

Key Latin American stock indexes and currencies at 1555 GMT:

Stock indexes daily % YTD %

change change Latest

MSCI Emerging Markets 1016.21 0.64 17.11 MSCI LatAm 2552.47 1.41 7.53 Brazil Bovespa 62032.97 0.33 3.00 Mexico S&P/BMV IPC 49276.07 0.51 7.96 Chile IPSA 4878.56 -0.07 17.52 Chile IGPA 24417.58 -0.06 17.76 Argentina MerVal 21324.47 -0.32 26.05 Colombia IGBC 10780.07 0.21 6.44 Venezuela IBC 107843.20 4.57 240.14 Currencies daily % YTD %

change change Latest

Brazil real 3.2748 1.01 -0.78 Mexico peso 17.9330 0.65 15.68 Chile peso 659.8 0.19 1.65 Colombia peso 2922.91 0.19 2.69 Peru sol 3.269 0.28 4.44 Argentina peso (interbank) 15.8600 0.19 0.09 Argentina peso (parallel) 16.44 0.24 2.31

(Reporting by Bruno Federowski; editing by Grant McCool)