EMERGING MARKETS-Brazil stocks bring in 2020 at all-time high; most Latam FX up

Susan Mathew

up@ (Updates prices)

* Trump says trade deal with China to be signed Jan.15

* Investors cheer China banks cutting reserve ratios

* Mexico manufacturing sector fell to new series low in December

* Chile economic activity declines in November

Jan 2 (Reuters) - Brazil stocks jumped 2% on Thursday to begin 2020 scaling new highs and most currencies in Latin America also rallied despite a strong dollar as trade optimism and policy easing by China lifted global sentiment. After logging a 13% rise in 2019, MSCI's index for Latin American stocks broke a three day losing streak helped by a 1.6% rise in Mexican shares and a near 3% surge in Chile stocks. The upbeat mood was brought on by U.S. President Donald Trump's announcement on Tuesday that the so-called Phase 1 of a trade deal with China would be signed on Jan. 15, as well as a Chinese central bank move to boost a slowing economy. China is a major destination for Latin America's commodity exports.

The People's Bank of China said it was reducing the cash that banks must hold as reserves, in its eighth such cut since early 2018, to give banks more money to lend. "Chinese stimulus will assure 6% growth and the bull case for the global equity rebound should remain firmly in place," said Edward Moya, senior market analyst at OANDA New York. Iron ore miner Vale was one of the major drivers on Sao Paulo's commodity-heavy Bovespa index, while the biggest boost came from financial exchange operator B3 , which rose nearly 5% after announcing reduced and simplified trading fees. Brazil's real, however, reversed early gains and lagged regional peers against a strong dollar. A survey on Thursday showed growth in Brazil's manufacturing sector almost completely evaporated in December. Other major Latam currencies firmed between 0.2% and 0.9%. Chile's peso turned around session losses. Chile's economic activity dropped in November, the central bank said, led by a decline in mining activity, as the impact of nearly two months of protests began to register in the world's top copper producer. But strategists at Citi Research said activity fell less than their expectations and improved on a month-on-month seasonally adjusted basis. "The improvement likely continued in December as protests calmed down. The magnitude of this reversal will be key to assess the activity outlook into 2020," Citi Research said. In Mexico, investors shrugged of minutes of the central bank's December meeting that said a recently announced minimum wage hike could fan inflation as well as data that showed activity in Mexico's manufacturing sector fell to a new series low in December.

Latin American stock indexes and currencies at 1930 GMT:




(Reporting by Susan Mathew in Bengaluru; editing by Grant McCool)