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EMERGING MARKETS-Latam currencies rebound off record lows on coronavirus stimulus hopes

Susan Mathew

stimulus hopes@ March 13 (Reuters) - Latin American currencies rose on Friday, moving up from all-time lows as hopes of more central bank stimulus and government spending lifted sentiment after worries over the coronavirus outbreak drove a bruising sell-off this week. As an increasing number of central banks across the globe made generous liquidity injections into markets and governments ramped up fiscal measures and virus containment efforts, hopes of more policy help supported risk sentiment. A recovery in oil prices saw Colombia's peso surge 3.4% in what could be its best day in four years, while Mexico's peso rallied 2%. Brazil's real jumped 3% and was on course for its biggest intraday gain since June 2018. Brazil will unveil a package of measures in the next few days to combat coronavirus and the economic damage it is causing, Economy Minister Paulo Guedes said on Friday, adding that all steps that don't affect the country's fiscal position will be considered. As copper prices rose, Chile's peso gained 1.5% against the dollar. The dollar regained its safe-haven appeal as investors scrambled to the most liquid currency as a rising number of new coronavirus cases outside China raised uncertainty about the impact on global growth. Markets sold off this week on fears that measures to contain the coronavirus will cause a significant economic slowdown in United States and Europe. An oil shock added to the worries. On the week, Colombia's currency in on course for its worst performance since 2008, and the Mexican peso since late 2016. "The brutal sell-off caused severe damage to market confidence, and any rallies may not prove sustainable and could be followed by another leg lower," warned Piotr Matys, senior EM forex strategist at Rabobank. All eyes are on the U.S. Federal Reserve's policy meeting next week. Investors have already priced in a 75-basis-point cut in the U.S. central bank's key overnight lending rate. With all of its companies gaining ground, Sao Paulo's Bovespa stock index surged as much as 15.4% before paring the gains to trade 7% higher. The index lost 14.8% on Thursday and is still on track to end the week around 20% lower - its sharpest fall since the 2008 global financial crisis. Mexico's IPC index jumped 3.2%, but weekly losses of around 8% are also its worst since 2008.

Key Latin American stock indexes and currencies at 1406 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 890.76 0.86MSCI LatAm 1823.19 8.31Brazil Bovespa 77672.98 7.01Mexico IPC 37798.07 3.17Chile IPSA 3781.50 1.45Argentina MerVal - -Colombia COLCAP - -Currencies Latest Daily %

change

Brazil real 4.7051 1.68Mexico peso 21.5630 1.57Chile peso 835.8 2.15Colombia peso 3912.05 2.91Peru sol 3.5198 0.20Argentina peso 62.8900 -0.11

(interbank)

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