EMERGING MARKETS-U.S.-China trade optimism lifts Latam stocks, FX

Sruthi Shankar and Susan Mathew

(Updates prices) Oct 10 (Reuters) - Latin American stocks gained on Thursday as investors rushed to buy risky assets, encouraged by signs that Washington and Beijing could reach a trade deal, while most currencies in the region firmed against a weaker dollar. MSCI's index of emerging market stocks rose 0.5% after three days of losses, with Mexican shares surging 1% and Brazil's Bovespa up 0.6%, after U.S. President Donald Trump confirmed he would meet Chinese Vice Premier Liu He on Friday for further trade talks. That added to optimism following a report China was willing to reach some sort of a deal, while an official from the U.S. Chamber of Commerce said a currency agreement in exchange for delaying further tariffs was possible. Washington has threatened to impose further tariffs on $250 billion worth of Chinese imports on Oct. 15. "It needs to be seen if this initiative allows China and the U.S. to reach an agreement allowing a postponement of further tariffs or even a reduction of already implemented tariffs," Morgan Stanley analysts wrote in a note. "But the renewed focus on the currency ... takes the focus back to (dollar) overvaluation," the note added. In Washington, top trade negotiators met for the first time since late July, seeking to hammer out a deal to end their 15-month trade war that has hit the global economy. The Mexican peso, a weather vane for trade sentiment, touched a two-week high as the dollar softened against a basket of major currencies. Rising copper prices aided the Chilean peso, which rose 0.5%, while the Colombian peso posted its best day in a week. Minutes from the Bank of Mexico's latest policy meeting showed two members of the five-member board wanted a 50-basis-point interest rate cut in September instead of the 25-basis-point cut that was announced by the central bank.

The minutes followed data on Wednesday showing consumer prices cooled for a fifth straight month in September.

Chile's central bank is expected to cut its main interest rate for the third time this year, to 1.75% in October, according to a monthly poll of 50 analysts published by the bank on Thursday, as growth and inflation continue to sputter in the world's top copper producer. Brazil's real weakened as a slower-than-expected rise in retail sales in August raised concerns about the economy's recovery. Brazil's latest numbers followed data on Wednesday that showed consumer price inflation in September fell to its lowest in more than a year, increasing chances for a third rate cut this year.

Key Latin American stock indexes and currencies at 1933 GMT:

Stock indexes Latest Daily %


MSCI Emerging Markets 997.44 0.45MSCI LatAm 2648.88 0.6Brazil Bovespa 101822.34 0.57Mexico IPC 42929.31 1.01Chile IPSA 5056.11 0.47Argentina MerVal 31578.19 4.087Colombia IGBC 12898.76 -0.07Currencies Latest Daily %


Brazil real 4.1226 -0.48Mexico peso 19.4722 0.46Chile peso 717.9 0.70Colombia peso 3457.49 0.19Peru sol 3.365 0.03Argentina peso 57.9700 0.03


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