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EMERGING MARKETS-Latam stocks rise, FX firms as Trump turns optimistic on China trade deal

Aaron Saldanha

China trade deal@ May 14 (Reuters) - Latin American stocks rose on Tuesday and regional currencies firmed against the dollar as U.S. President Donald Trump sounded optimistic about prospects for a trade deal with China even as his administration readied 25 percent tariffs on all remaining Chinese imports. Trump said he thought recent discussions in Beijing would be successful, while Beijing has agreed to keep talking with Washington, a day after announcing details of new tariffs on U.S. imports. MSCI's index of Latin American stocks added 0.6%, recovering ground after Monday's 2.6% fall. MSCI's Latin American currencies index gained 0.5%, although risk appetite was tepid. "To us it is difficult to believe that last week's pullback is all it takes to fully price the weaker global trade environment. We therefore remain defensive on EMFX," Dirk Willer, head of emerging market strategy at Citi Research, and Kenneth Lam, an emerging markets FX strategist, wrote in a note. Sao Paulo-traded equities edged up 0.1%, aided by gains in consumer staples and materials stocks. State-run oil firm Petroleo Brasileiro SA's common and preferred shares rose 0.1% and 0.3%, respectively, against a backdrop of rising oil prices.

Vale SA was up 0.3%, clawing back some lost ground from Monday's 4.1% dive. The mining giant is reviewing its assets portfolio and considering doubling its Carajas Serra Sul iron ore mine's output after 2020. Brazil's real firmed 0.6%, while yields on local 10-year bonds fell 9 basis points to 8.81%. Mexican stocks edged up, while the peso firmed 0.5%. The Mexican government is taking steps to ease state oil firm Pemex's debt woes, including $2.5 billion in debt refinancing and renewing credit lines with three banks as well as a gradual tax cut. "The announcement that the fiscal regime of Pemex could change as early as next year poses a meaningful risk for the sovereign, as any reduction in taxes would impact directly the government's revenues," Carlos Petersen, senior analyst at the Eurasia Group, wrote in a note. Argentina's stocks benchmark rose 1.6%, while the country's peso firmed.

Latin American stock indexes and currencies at 1430 GMT

Stock indexes daily %Latest changeMSCI Emerging Markets 1014.61 -0.18MSCI LatAm 2602.15 0.62Brazil Bovespa 91827.80 0.11Mexico IPC 43164.95 0.05Chile IPSA 5008.48 0.77Argentina MerVal 32821.93 1.62Colombia IGBC 12390.32 0.22Currencies daily %

change Latest

Brazil real 3.9736 0.10Mexico peso 19.1099 0.60Chile peso 692.6 0.12Colombia peso 3277.93 0.76Peru sol 3.322 0.15Argentina peso (interbank) 44.9200 0.58

(Reporting by Aaron Saldanha in Bengaluru)