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EMERGING MARKETS-Most Latam FX firm, Chile markets recover after slide

Susan Mathew

Oct 22 (Reuters) - Most Latin American currencies firmed on Tuesday, while Chilean markets recovered assuaged by President Sebastian Pinera's willingness to listen to demands by protesters after violence over the weekend hammered markets last session. Chile's peso traded steady after a 2.7% slump on Monday - its worst day in more than six years, while a more than 1% jump in stocks came after a 4.6% dive which was its biggest one-day drop in almost two years. Pinera said he would meet opposition leaders to forge a "new social contract" to alleviate inequality as thousands of Chileans defied a military curfew in protest marches around the capital. Violent protests over the weekend were sparked by a raise in public transport fares and were more broadly against higher cost of living, and prompted the president to place Santiago and few other cities under emergency. Other regional currencies moved higher against a firmer dollar, in line with broader emerging markets. Risk sentiment was boosted by encouraging comments out of Washington and China on progress in trade negotiations which bolstered expectations of a partial deal being signed next month.

Brazil's real jumped 1% with investors keenly awaiting results of a final Senate vote on the government's pension reform bill expected to take place later in the day.

If approved, it clears the way to pass the pension bill - seen as a vital signal to financial markets that Brazil is serious about restoring fiscal discipline. The bloated pension system is the main cause of the government's unsustainable budget deficit. Stocks in Sao Paulo rose 0.9% with education company Yduqs leading gains as it continued last session's rally post a $467 million acquisition. A measure of Brazilian inflation this month fell to its lowest in over 20 years, figures on Tuesday showed, cementing the view that the central bank will cut interest rates to a fresh all-time low next week. In Argentina, presidential front-runner Alberto Fernandez called on incumbent Mauricio Macri to keep the peso stable after general elections on Sunday, and avoid a repeat of the currency crash that followed the August primary. Fernandez blew past business-friendly Macri in the primary, setting the stage for an expected outright victory in the presidential election on Oct. 27. The peso plunged more than 30% over the next few days, as investors feared return of populist policies under Fernandez. The election results could unleash volatility once more, a Reuters poll of 14 economists showed.

Key Latin American stock indexes and currencies at 1415 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1034.07 0.54MSCI LatAm 2756.48 1.44Brazil Bovespa 106932.52 0.86Mexico IPC 43514.47 0.25Chile IPSA 4998.64 0.92Argentina MerVal - -Colombia IGBC 12919.03 -0.56Currencies Latest Daily %

change

Brazil real 4.0870 1.05Mexico peso 19.0999 0.08Chile peso 727.41 0.07Colombia peso 3432.09 0.43Peru sol 3.3328 0.12Argentina peso 58.6500 -0.24

(interbank)

(Reporting by Susan Mathew in Bengaluru; Editing by Alistair Bell)