EMERGING MARKETS-Chilean assets zoom on constitution deal; Latam FX to snap 9 day losing streak

Susan Mathew

day losing streak@

* Chilean peso on way to best day in more than a decade

* Latin American FX set to snap out of 9 days of losses

* Brazil markets shut for holiday

(Updates prices) Nov 15 (Reuters) - A surge in Chilean assets lifted Latin American markets on Friday after lawmakers agreed to hold a referendum to replace a dictatorship-era constitution, while optimism on the U.S.-China trade front also lifted the mood. Chile's stock index soared nearly 8%, on track to post its biggest one-day gain in 11 years. The peso jumped 4%, putting the broader Latin American index in positive territory for the first time in 10 sessions. The currency has lost 11.4% since Oct. 21, when protesters turned to vandalism after a hike in public transport fares sparked a wider unrest over economic inequality in one of Latin America's most stable nations. Bowing to one of the demands, lawmakers signed an agreement to hold a referendum next April in which voters will be asked whether they approve the idea of a new constitution and whether current lawmakers should serve on the commission that would redraft the document. "It is a positive step politically and should help defuse the discontent amongst the great majority of the peaceful protesters," said Citigroup emerging market strategists Dirk Willer and Kenneth Lam. "Given how long the process will be, and how over-sold CLP is, we believe this is short-term CLP positive." The positive sentiment, coupled with a weakness in the dollar, lifted other currencies in the region, with the Colombian peso jumping 1% after five sessions of losses.

Mexico's peso rose 0.6% to extend gains after the central bank's 25-basis point interest rate cut on Thursday was less aggressive than some had feared. While the bank gave little reason to believe it will not continue a 25-basis point per meeting easing path, "we continue to believe that an increment to a 50 bps pace of easing will remain off the table for now," said Sacha Tinhayi, deputy head of EM strategy at TD Securities. The moves were also in line with an uptick in global sentiment on a return of optimism around a phase one U.S.-China trade deal. White House adviser Larry Kudlow said the two sides were getting close to an agreement and that "the mood music is pretty good." Financial markets in Brazil were closed for a local holiday.

Key Latin American stock indexes and currencies at 1903 GMT:

Stock indexes daily % change


MSCI Emerging Markets 1049.22 0.67MSCI LatAm 2685.75 1.02Brazil Bovespa - -Mexico IPC 43318.10 0.3Chile IPSA 4862.40 8.09Argentina MerVal 31838.94 2.641Colombia IGBC 13220.45 0.25Currencies daily % change


Brazil real - -Mexico peso 19.2199 0.48Chile peso 776.9 3.46Colombia peso 3423.45 0.79Peru sol 3.363 0.71Argentina peso (interbank) 59.6700 0.06

(Reporting by Susan Mathew and Medha Singh in Bengaluru; Editing by Nick Zieminski and Dan Grebler)