EMERGING MARKETS-Brazil markets slip after Lula's fiscal comments, Latam indexes eye weekly gains
* Brazil's president says no need to erase fiscal deficit next year * Vale's Q3 profit surpasses expectations * Latam stocks down 0.9%, FX flat For the week EM stocks down 0.7%, currencies up 0.1% (Updated at 3:45pm ET/1945 GMT) By Johann M Cherian and Lisa Pauline Mattackal Oct 27 (Reuters) - Most Latin American currencies advanced on Friday with broader indexes tracking the region's assets set for weekly gains after U.S. data showed easing inflation pressures . However, Brazil's currency and stock index turned lower after the country's president said erasing its fiscal deficit would not be a priority in 2024. Mexico's peso, Colombia's peso and Peru's sol added between 0.2% and 0.7% against a weaker U.S. dollar, though losses in Brazil's real meant a basket tracking regional currencies was about flat on the day. U.S. data showed personal consumption expenditure was broadly in line with expectations, building market expectations that the Federal Reserve will keep interest rates on hold next week. "Markets have been trading a bit cautiously (so far) considering the environment of higher rates, and so, with an (inflation) print that essentially confirms what we already knew ... that's enough for markets to be more optimistic," said Juan Manuel Herrera, senior economist at Scotiabank. However, Brazil's real reversed earlier gains and fell 0.5%, eyeing its biggest daily decline in two weeks, after President Luiz Inacio Lula da Silva said his government does not need to erase its fiscal deficit in 2024. The comments highlighted the difficulties in implementing a new fiscal framework that investors have welcomed. Brazil's Bovespa stocks index dropped 1.3%, which weighed on the MSCI's gauge of Latin American equities which fell 0.9%. Overall, the indexes tracking South American stocks and currencies are both on course for weekly gains of about 1%. Signs of economic resilience in Brazil, higher oil prices and data reflecting economic recovery in top consumer China have supported regional assets despite continued concerns over high U.S. interest rates and concerns over escalation in the conflict between Israel and Hamas. Mixed corporate earnings results also weighed on regional stock indexes, with Mexican benchmark index slipping 0.1%. Grupo Bimbo's stock fell nearly 4% after the breadmaker's third-quarter net profit plummeted 31%. In Brazil, Vale SA jumped 3.5% as the mining giant reported third-quarter net profit above market expectations. Shares of state-run oil firm Petrobras dipped 0.9% after reporting crude oil production during the third quarter rose 9.6% from a year ago. Argentina's Merval index slipped 2.5%, set for its biggest weekly loss since March 2020 on a week where its markets have been battered by political uncertainty. Colombia's Colcap rose 0.8% ahead of regional elections on Sunday. For the week, MSCI's gauge for emerging market stocks were down 0.7%, while a basket of EM currencies was unchanged. Chilean markets were closed for a local holiday. Key Latin American stock indexes and currencies at 1945 GMT: Latin Latest Daily % change American market prices from Reuters MSCI Emerging Markets 918.82 0.87 MSCI LatAm 2198.01 -0.92 Brazil Bovespa 113266.95 -1.32 Mexico IPC 49113.23 -0.12 Chile IPSA 0.00 0 Argentina MerVal 655858.82 -2.562 Colombia COLCAP 1092.73 0.81 Currencies Latest Daily % change Brazil real 5.0142 -0.49 Mexico peso 18.1065 0.24 Chile peso 933.3 0.00 Colombia peso 4102.55 0.73 Peru sol 3.8437 0.31 Argentina peso 350.0000 0.00 (interbank) Argentina peso 960 2.08 (parallel) (Reporting by Johann M Cherian and Lisa Mattackal in Bengaluru; editing by Jonathan Oatis and Alistair Bell)
