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Latam stocks rise on hopes of stimulus; currencies fall

(Updates prices, adds market strategist’s quote) * Mexico stocks rise on hopes of pipeline deal * Brazil’s real hits 3-month low * Argentine markets shut for holiday Aug 19 (Reuters) – Latin American stocks broadly rose on Monday as signs of stimulus for major economies lifted global sentiment, while currencies in the region were dented by a stronger dollar. Stocks in Mexico led the charge climbing 0.6% as a rebound in global equities from a brutal sell-off last week and news of a deal to resolve a pivotal pipeline dispute in the country provided some relief to investors. Mexican President Andres Manuel Lopez Obrador said on Monday that his government is close to an accord over a contractual dispute with the builders of several gas pipelines, heralding a solution to a case that has sapped investor confidence in Latin-America’s second-largest economy. Stock indices in Chile and Colombia also rose as equities worldwide came off a rough week, marked by worries about an escalation in the U.S.-China trade war, global economic slowdown fears and turmoil in Argentine markets. Brazil’s Bovespa was the only laggard, sliding 0.5% weighed down by financials. Currencies in the region weakened with the real hitting a three-month low, as investors speculated about the path of U.S. interest rates ahead of Federal Reserve Chairman Jerome Powell’s speech at an annual meeting of central bankers in Jackson Hole later this week. Chile’s peso fell 0.7% after central bank data showed the country’s gross domestic product grew 1.9% in the second-quarter of 2019 as slumping global trade and falling copper prices continue to take their toll. “Although Chile’s external account imbalance has widened slightly, relative to the past few years, it remains moderate, well financed, and is not a source of concerns for investors,” said Credit Suisse analysts in a note. Chilean officials have been downgrading expectations for growth for months amid a mining slump that has dragged on exports from the world’s top copper producer. Markets in Argentina were closed for a local holiday, but investors will be watching out for signs of further weakness when markets open for trading after ratings agencies Fitch and Standard & Poor’s downgraded Argentina’s sovereign debt rating. Argentine markets have collapsed since last week’s primary vote saw opposition candidate Alberto Fernandez trouncing business friendly President Mauricio Macri. The cost of insuring against an Argentine sovereign default rose after Fernandez said the country would struggle under present conditions to repay a loan to the International Monetary Fund. Key Latin American stock indexes and currencies at 1905 GMT Stock indexes daily % change Latest MSCI Emerging Markets 976.39 0.63 Brazil Bovespa 99007.08 -0.5 Mexico IPC 39562.80 0.67 Chile IPSA 4811.70 0.27 Argentina MerVal – – Colombia IGBC 12527.47 1.1 Currencies daily % change Latest Brazil real 4.0605 -1.42 Mexico peso 19.8040 -0.78 Chile peso 712.9 -0.58 Colombia peso 3435 -0.05 Peru sol 3.386 -0.24 Argentina peso – – (interbank) (Reporting by Agamoni Ghosh and Sruthi Shankar in Bengaluru; Editing by Nick Zieminski)

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