EMERGING MARKETS-Dovish Fed lights up Latam FX; Brazil stocks at record-high
* Bovespa crosses the 98,000 mark * Chilean peso on track to post best month since Jan 2012 * Brazil's real at three-month high By Agamoni Ghosh Jan 31 (Reuters) - Latin American currencies lit up on Thursday as the dollar weakened after the U.S. Federal Reserve left borrowing costs unchanged and signaled a dovish tone for future hikes, while Brazil stocks set another record high, continuing their bull run this year.
The Fed signaled its three-year-drive to tighten monetary policy may be at an end amid a cloudy outlook for the U.S. economy due to global headwinds and impasses over trade and government budget negotiations.
"The Fed provided a big boost but how much more help can it provide to EM assets?" said Morgan Stanley analysts in a note.
"A lot is now in the price. We stay bullish on EM for now and look for good news on a trade deal as the next catalyst," the note added.
Brazil's real jumped to a three-month high, on track to end the month higher, buoyed by market optimism towards pension reforms promised by the government of President Jair Bolsonaro.
Chile's peso was on track to post its best monthly gains since January 2012 after central bank policymakers decided unanimously on Wednesday to raise the benchmark interest rate by 25 basis points, in line with market expectations.
Mexico's peso climbed 0.4 percent, recovering from a sharp fall in the previous session as a Fitch downgrade of state oil firm Pemex left questions over the sovereign debt rating of the country.
Brazil's benchmark Bovespa index scaled a new record high on the day, led by Brazil's second largest private lender Banco Bradesco, which jumped after the company beat Q4 profit estimates on lower loan-loss provisions.
Disaster-tainted miner Vale rose about 1 percent, with shares cautiously on recovery track after their worst fall in history on Monday.
Brazil's Minas Gerais state labor prosecutors' office said on Thursday it had frozen more than 800 million reais ($219 million) of Vale's funds as compensation for victims of last week's deadly tailings dam burst.
Stocks in Chile rose for the first time in three days, buoyed by global equities which registered their best January on record after soothing sounds from the Fed.
Key Latin American stock indexes and currencies at 1315 GMT Stock indexes daily % Latest change MSCI Emerging Markets 1049.14 1.21 MSCI LatAm 2938.54 2.04 Brazil Bovespa 98073.94 1.11 Mexico IPC - - Chile IPSA 5418.19 0.55 Argentina MerVal - - Colombia IGBC - - Currencies daily % change Latest Brazil real 3.6569 0.73 Mexico peso 19.0532 0.44 Chile peso 659.55 0.60 Colombia peso - - Peru sol - - Argentina peso (interbank) - - (Reporting by Agamoni Ghosh in Bengaluru Editing by Frances Kerry)
