SAO PAULO, July 28 (Reuters) - The Brazilian real strengthened on Friday after data showing underwhelming wage gains in the United States reduced bets on another U.S. rate hike this year. The U.S. economy accelerated in the second quarter, matching analyst expectations, but wage growth slowed and inflation was limited, putting the Federal Reserve in a tight spot as it looks to continue raising interest rates. The report was the latest to stoke bets on a slower-than-expected pace of U.S. monetary tightening, an outlook that has boosted demand for high-yielding emerging market currencies. The Brazilian real firmed 0.4 percent on Friday to 3.14 reais, paring this week's losses to roughly 1 percent. The currency has struggled to extend recent gains after a four-week rally drove it to its strongest level in two months. The real's strength tracked the global weakness of the U.S. currency following Friday's data, with the dollar weakening against a basket of benchmark currencies. The Colombian peso firmed as much as 0.9 percent, also boosted by stronger oil prices and bets that the central bank will soon halt interest rate cuts. The bank on Thursday reduced its benchmark rate by 25 basis points to 5.50 percent, with one of seven policymakers voting to hold. "The fact that six board members agreed to slow the easing pace, and one even wanted to pause, seems like a clear signal that (the central bank) is preparing to end its easing cycle," economists at JPMorgan wrote in a note to clients. The Mexican peso was slightly weaker as traders avoided big bets on further appreciation of the currency, which has been the region's best performer this year as fears eased over U.S. President Donald Trump's protectionist pledges. Still, traders said the currency could see another rally as U.S. trade negotiations advance. The International Monetary Fund on Friday said the peso is undervalued between 5 and 15 percent in a scenario where protectionist risks don't materialize.
Brazil's benchmark Bovespa stock index seesawed on a heavy batch of corporate earnings. Shares of Estácio Participações SA were the biggest gainers, rising as much as 7 percent after the for-profit college operator returned to profit. Santander Brasil units, a blend of common and preferred shares, fell 2.6 percent, among the biggest losers. Brazil's No. 4 listed bank posted record quarterly earnings but loan-loss provisions rose, triggering some profit-taking for the stock, traders said.
Latin American stock indexes and currencies at 1600 GMT:
Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1061.98 -0.65 23.97 MSCI LatAm 2732.28 -0.13 16.89 Brazil Bovespa 65201.82 -0.12 8.26 Mexico S&P/BVM IPC 50955.32 -0.59 11.64 Chile IPSA 5058.54 0.18 21.85 Chile IGPA 25278.83 0.18 21.92 Argentina MerVal 21452.45 0.74 26.80 Colombia IGBC 10929.98 -0.31 7.92 Venezuela IBC 134770.98 0.14 325.08 Currencies daily % YTD % change change
Brazil real 3.1424 0.41 3.40 Mexico peso 17.7525 -0.15 16.85 Chile peso 651 -0.27 3.03 Colombia peso 3000.5 0.35 0.03 Peru sol 3.245 0.00 5.21 Argentina peso (interbank) 17.7600 -0.62 -10.61 Argentina peso (parallel) 18.46 -0.22 -8.88
(Reporting by Bruno Federowski; editing by Grant McCool)