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Brazil, Chile stocks hit 4-month highs on China recovery hopes

* Colombian peso at near 1-month high * Chile’s peso supported by copper prices * Argentine risk index falls after new bond plan (Updates prices, adds comments) By Ambar Warrick and Shreyashi Sanyal July 6 (Reuters) – Most Latin American currencies and stocks strengthened on Monday as strong economic data through last week spurred sustained bets on a swift post-coronavirus recovery. Risk appetite was bolstered by a rally in Chinese equities and the yuan, with the latter touching a 3-1/2 month peak amid improving economic readings in the world’s second-largest economy. Chile’s peso was among the best-performing currencies in the region, as the prices of copper, the country’s largest export, surged on the prospect of improving Chinese demand. Copper prices had also risen on concerns over disruptions to Chilean supply from the COVID-19 pandemic. “With LatAm becoming the global epicenter for Covid-19 cases, the supply narrative has grown louder of late, as the market recognizes that multinational miners may continue to enforce social distancing practices that could hamper current or future output until the contagion is clearly remedied,” analysts at TD Securities wrote in a note. Chilean stocks rose 2.2% to a four-month high, outperforming regional peers, while the MSCI’s index of Latam equities added 1.5%. Chilean President Sebastian Pinera on Sunday announced a $1.5 billion package of measures to help keep the country’s ailing middle class afloat as the coronavirus pandemic continues to ravage the economy. Economic recovery in China also stands to benefit Latin American markets, given their large agriculture and basic resources exports to the country. The oil-sensitive currencies of Mexico and Colombia extended gains from the prior week, underpinned by recent strength in the crude market. Colombia’s peso was near a one-month high, while the Mexican peso scaled a more than two-week peak. Brazil’s real fell 0.5%, while stocks added about 1.8%, touching their highest level since early March. Spiking coronavirus cases across Latin America prompted some caution, with the number only set to grow as economies in the region slowly scale back lockdown measures. Analysts at Capital Economics said even if lockdown measures were to be eased further, with the virus continuing to spread, Latin America’s economic outlook will still be much worse than in places which have already controlled the virus. Argentina’s peso was muted. The country’s risk index fell after the government unveiled an improved debt restructuring offer to creditors. Argentina set a deadline of August 4 for creditors to accept the new deal, which increases coupons and includes a bond to account for accrued interest on the treasuries covered by the pact. Argentine risk assets had lagged over the past week due to uncertainty surrounding any deal. Key Latin American stock indexes and currencies at 1937 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1059.39 2.55 MSCI LatAm 1982.13 1.54 Brazil Bovespa 98520.14 1.81 Mexico IPC 37886.61 -0.17 Chile IPSA 4296.10 2.24 Argentina MerVal 43411.22 9.188 Colombia COLCAP 1128.38 0.28 Currencies Latest Daily % change Brazil real 5.3452 -0.52 Mexico peso 22.3480 0.19 Chile peso 799.1 0.41 Colombia peso 3635.75 0.23 Peru sol 3.5438 -0.14 Argentina peso (interbank) 70.8100 -0.24 Argentina peso (parallel) 123 3.25 (Reporting by Shreyashi Sanyal and Ambar Warrick in Bengaluru; Editing by Dan Grebler and Chizu Nomiyama)

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