Emerging Markets - LatAm stocks up on Brazil, U.S. factory activity
by Danielle Assalve and Gabriel Stargardter

Reuters    Translate This Article
2 October 2012

SAO PAULO/MEXICO CITY, Oct 1 (Reuters) - Latin American stocks rose on Monday after rising sentiment among Brazilian manufacturers backed bets of an economic rebound in the region's top economy and a surprising expansion in factory activity in the United States boded well for Mexico.

The MSCI Latin American stock index added 0.63 percent to 3,697.77, the third gain in the last four sessions.

A survey of Brazil's manufacturing sector recorded its best month since March on strong output and a slower pace of layoffs, as the index rose to just short of the 50 mark that divides contraction and expansion.

Meanwhile, an index of U.S. factory activity pointed to expansion for the first time since May, bolstering hopes for a stronger economy in one of Mexico's most important trading partners.

'We are witnessing a recovery today in Brazil because of the losses of recent days that some of us are judging overdone,' said Luiz Roberto Monteiro, a stock trader with São Paulo-based brokerage Renascença Corretora.

Expectations of support from central banks, including the Federal Reserve and the European Central Bank, should keep pushing investors toward riskier assets, traders said.

Brazil's benchmark Bovespa stock index rose 0.67 percent to 59,570.80, its first gain in five sessions. The index has fallen nearly 4 percent since Sept. 24.

Gol Linhas A�ereas led gains, up 10.63 percent on speculation Brazil's No. 2 airline would announce a stake sale to a larger rival. Instead the company announced a purchase order for 60 Boeing 737 MAX planes, the largest order for jets in Latin America, set for delivery beginning in 2018.

Brazilian banks rebounded from a recent slump. Banks fell sharply last week amid concerns that their profits would fall as the government pushed for lower bank spreads, the difference between what they pay in interest to depositors and what they charge in interest on loans.

Shares of the country's two largest private-sector banks Itau and Bradesco, also gained, with Itau up 1.57 percent, and Bradesco up 1.84 percent.

Preferred shares of state-run oil company Petrobras rose 0.63 percent, even after the company reported that August domestic output fell for the fifth straight month because of maintenance shutdowns of offshore facilities.

Mexico's IPC index rose 0.63 percent to 41,124.56, the fourth straight day of gains. Banking group Banorte led the charge, rising 3.78 percent in its largest single-day gain since early August.

'The bourse is above 41,000 points, driven firmly by the performance of the Dow Jones (industrial average) and the manufacturing figures from the United States,' said Luis Anaya, a trader at the Casa de Cambio Unica brokerage in Mexico City.

Mexico sends nearly 80 percent of its exports to its northern neighbor and its factories tend to closely track activity in the United States.

An index of manufacturing activity in Mexico slowed for a third month in a row in September, but still pointed to further expansion ahead.

Chile's blue-chip IPSA index was flat at 4,232.08.

To see a table of Latin America's key stock indexes please click here and scroll down.

(Reporting by Danielle Assalve and Gabriel Stargardter; Additional reporting by Guillermo Parra-Bernal; Writing by Gabriel Stargardter; Editing by Jan Paschal)

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