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EMERGING MARKETS-Brazil stocks hit all-time high on economic optimism

SAO PAULO, Oct 5 (Reuters) - Brazil's benchmark stock index on Thursday broke above the 78,000-point level for the first time ever, boosted by the outlook for an accelerating economic recovery and low interest rates. The Bovespa rose as much as 1.9 percent to 78,024, a new all-time high, extending the index's gains so far this month to 5 percent. Signs that Latin America's largest economy is emerging faster than expected from the deepest recession in a century have boosted demand for Brazilian assets. Low inflation has also allowed Brazil's central bank to slash interest rates, with traders all but convinced they will fall to record lows this year, heightening the allure of stocks. Economists at Itaú Unibanco on Thursday revised their estimates for gross domestic product growth in 2018 to 3 percent from 2.7 percent, saying the benchmark Selic interest rate is likely to fall to 6.5 percent. Shares whose performance is closely tied to economic growth, such as financials and utilities, led the rally. State-controlled oil company Petróleo Brasileiro SA also rose as expectations that major producers could cut output next year lifted crude prices. The Brazilian real, however, was nearly flat as traders avoided big bets ahead of the release of key U.S. jobs data on Friday. Other Latin American currencies, such as the Mexican and Chilean pesos, also seesawed. New U.S. employment figures could help traders adjust their bets over the pace of Federal Reserve interest rate increases in the coming months. The U.S. central bank has signaled it will hike rates in December, potentially reducing demand for higher-yielding assets, but many investors expect it to take its time going forward as inflation remains stubbornly below its 2 percent target.

Key Latin American stock indexes and currencies at 1625 GMT:

Stock indexes Latest Daily YTD pct pct change

change

MSCI Emerging Markets 1,104.21 0.22 27.78 MSCI LatAm 3,021.60 0.78 28.1 Brazil Bovespa 77,608.81 1.33 28.86 Mexico S&P/BVM IPC 50,826.03 0.52 11.36 Chile IPSA 5,442.11 -0.15 31.09 Chile IGPA 27,227.96 -0.07 31.32 Argentina MerVal 26,820.01 1.3 58.53 Colombia IGBC 11,102.47 0.2 9.62 Currencies Latest Daily YTD pct pct change

change

Brazil real 3.1329 -0.07 3.71 Mexico peso 18.3040 -0.22 13.33 Chile peso 627.95 0.60 6.81 Colombia peso 2,923.71 0.32 2.66 Peru sol 3.254 0.15 4.92 Argentina peso (interbank) 17.3300 0.17 -8.40 Argentina peso (parallel) 17.75 0.39 -5.24

(Reporting by Bruno Federowski, editing by G Crosse)