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EMERGING MARKETS-Brazilian stocks lead Latam shares higher amid trade optimism

Susan Mathew

optimism@ (New throughout, updates prices) Oct 9 (Reuters) - Latin American stocks tracked Wall Street higher on Wednesday, with Brazilian shares up more than 1% on heightened possibilities of a rate cut by the country's central bank and on positive outlooks from some firms. MSCI's index of regional shares rose 0.8%, with shares in Colombia also up 0.2%, while Mexican shares were marginally higher. Optimism stemmed from signs of easing hostility in the U.S.-China trade war just a day before high-level trade talks between the two sides are set to begin. Reports said China was still open to agreeing to a partial trade deal with the United States, and that Beijing was offering to increase its annual purchases of U.S. agricultural products. Analysts, however, remained skeptical. "Even if a partial deal is reached later this week, this will not change our view that the trade talks will eventually break down as China appears unwilling to meet the U.S. core demands," analysts at Capital Economics wrote in a note. Brazilian shares climbed 1.4%, posting their best day in a month. Banco Santander Brasil rose 3.6% after the lender said it expects to see its loan book grow by more than 10% per year through 2022 and maintain its current profitability ratio at 21%. Airline Gol gained after the carrier said it expects core earnings margin to have been between 29% and 31% in the third quarter. At the bottom of the index were shares of meat processor JBS after U.S. lawmakers sought to bring a probe into its U.S. acquisitions. Food processor BRF slipped after it confirmed its plant in Abu Dhabi was being audited and that Saudi Arabia had restricted buying of some of its products. Brazil's real currency fell as much as 0.4% before steadying. Official data showed consumer price inflation missed expectations and fell to its lowest in more than a year in September, strengthening expectations of a third interest rate cut this year. Capital Economics analysts now expect a 50-basis-point (bps) cut in rates this month, as opposed to a previous forecast of a cut of 25 bps. Similar data out of Mexico, albeit in line with expectations, also fuelled rate cut expectations by the country's central bank. The Mexican peso was up 0.2% after two days of gains against the dollar. As hopes of a more amicable trade deal between Washington and Beijing rose, the dollar steadied against a basket of six rivals, while it climbed against the safe-heaven yen. Elsewhere in the emerging market universe, Turkey's lira slid 0.5%, breaking through what traders called a key support level of 5.85 against the dollar, after Turkey launched a military operation targeting Kurdish fighters in northeast Syrian.

Key Latin American stock indexes and currencies at 1935 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 993.80 -0.02MSCI LatAm 2642.74 0.8Brazil Bovespa 101512.97 1.42Mexico IPC 42543.84 0.02Chile IPSA 5032.56 -0.17Argentina MerVal 30405.62 0.49Colombia IGBC 12935.41 0.24Currencies Latest Daily %

change

Brazil real 4.0940 -0.07Mexico peso 19.5690 0.29Chile peso 723.5 0.18Colombia peso 3464.3 -0.47Peru sol 3.366 0.48Argentina peso 57.9800 -0.22

(interbank)

(Reporting by Susan Mathew in Bengaluru Editing by Paul Simao)