EMERGING MARKETS-Latam markets rise on China virus fight hopes and Brazil rate cuts

Sruthi Shankar

rate cuts@

* Risk appetite rises on coronavirus treatment hopes

* Brazil central bank delivers expected rate cut

* Chilean peso firms as copper jumps to one-week high

(New throughout, updates prices, market activity and comments) Feb 5 (Reuters) - Latin American currencies and stocks rose on Wednesday for a third session, as appetite grew for riskier assets on reports of progress on the battle against China's coronavirus, and as Brazil's central bank lowered its benchmark interest rate. A Chinese university team said it found a drug to treat people infected with the virus while UK researchers claimed a "significant breakthrough" in the search for a vaccine.

Beijing took measures this week to boot liquidity in its economy and markets. The fast-spreading outbreak has killed nearly 500 people and disrupted businesses and travel globally.

The Chilean peso rose, up off a two-month low hit last week on concerns about China's demand for top export copper. The Mexican peso gained 0.4%. "I would say from EM FX perspective, the response has been very uneven," said Ed Al-Hussainy, senior currency and rates analyst at Columbia Threadneedle. "Usually when you see a global growth shock, we see significant correction in currencies like the Mexican peso and the Indian rupee. We didn't see it. It really speaks to this immense pressure in investors to reach for high-yielding assets." The Brazilian real edged up 0.4% after the central bank cut its benchmark interest rate 25 basis points to a record-low 4.25%, the fifth straight cut but smallest of the rate-cutting cycle. The central bank has made four deep rate cuts since the second half of 2019. A Reuters poll showed the real is forecast at 4.17 per dollar in one month. On Friday the currency was at 4.2862 per dollar, the weakest point on record. Sao Paolo stocks rose 0.4%, with help from a 4% jump in lender Banco Bradesco SA on a better-than-expected outlook for 2020. The broader Latin American equities index jumped to a one-week high along with global stock market gains.

In Argentina, data showed industrial output rose 1.2% in December, its first rise in 20 months. Separately, Economy Minister Martin Guzmanon told the International Monetary Fund Buenos Aires cannot continue servicing unsustainable debt, as the IMF encouraged restructuring policies. Argentina is fighting a steep recession and needs to restructure $100 billion in sovereign debt with creditors, including the IMF.

Key Latin American stock indexes and currencies at 2125 GMT:

Stock indexes Latest Daily %


MSCI Emerging Markets 1089.40 0.37MSCI LatAm 2828.21 -0.01Brazil Bovespa 116028.27 0.41Mexico IPC 44817.67 -0.51Chile IPSA 4675.28 0.13Argentina MerVal 40767.10 -0.65Colombia COLCAP 1656.30 0.75Currencies Latest Daily %


Brazil real 4.2353 0.45Mexico peso 18.5927 0.35Chile peso 778 0.42Colombia peso 3362.8 -0.08Peru sol 3.361 0.03Argentina peso (interbank) 60.5875 0.00

(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Bernadette Baum and David Gregorio)