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EMERGING MARKETS-Bovespa surges on upbeat earnings outlook, fading coronavirus fears

By Sruthi Shankar

* Virus may peak this month in China -expert * Colombian peso climbs from two-month low * Vale provides biggest boost to Bovespa (Updates prices, adds comment) By Sruthi Shankar Feb 11 (Reuters) - Brazilian shares rallied on Tuesday on upbeat results from miner Vale SA and lender Itaú Unibanco Holding SA, and as global stock markets surged after China's senior medical adviser suggested the coronavirus outbreak may be over in April. The Bovespa gained 2.3%, on course for its best day in over a month and leading gains among major Latin American stock markets. Vale gained 3.5% after it left its 2020 iron ore production guidance unchanged despite posting a sharp output decline in the fourth quarter and as China iron ore futures registered their biggest one-day gain in seven months. Itaú Unibanco rose 1.8% as Brazil's largest lender estimated fee income growing above its 2020 national inflation forecast and it aimed to trim costs by up to 2%. The global mood brightened after China's senior medical adviser said on Tuesday the number of new cases was falling in some provinces and forecast the epidemic would peak this month. Concerns about the impact of the outbreak on the world's second largest economy has dented investor appetite for Latin American assets, as China accounts for a major share of demand for the region's goods. Most Latin American currencies also firmed, but the Brazilian real hit a fresh record low of 4.3403 per dollar, extending losses for a fourth session amid capital outflows from country's financial assets. A central bank survey of economists showed on Monday inflation expectations for 2020 dropped to a new low of 3.25%. Last week, the central bank cut its benchmark Selic rate to a record low of 4.25%. "Declining 2020 inflation expectations could ultimately also translate into lower 2021 inflation expectations, suggesting a higher bar for markets to price out the degree of policy accommodation currently embedded in the curve," Morgan Stanley analysts wrote in a note. However, the Colombia's peso currency rebounded from two-month lows as crude prices gained. The Mexican peso and the Chilean peso also strengthened against the dollar. Federal Reserve Chair Jerome Powell told Congress the U.S. economy was in a good place, even as he cited the potential threat from the coronavirus in China and concerns about the economy's long-term health. Key Latin American stock indexes and currencies at 1959 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1098.93 1.1 MSCI LatAm 2784.22 1.82 Brazil Bovespa 115129.06 2.27 Mexico IPC 45143.69 1.93 Chile IPSA 4660.27 0.71 Argentina MerVal 39869.36 -2.883 Colombia COLCAP 1645.56 0.15 Currencies Latest Daily % change Brazil real 4.3253 -0.11 Mexico peso 18.6540 0.23 Chile peso 791.5 0.24 Colombia peso 3418.35 1.06 Peru sol 3.387 0.17 Argentina peso (interbank) 61.1150 -0.22 (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Richard Chang)