EMERGING MARKETS-Latam stocks hit 2-mo high to test key levels

* U.S. labor market gains buoy risk appetite

* Key resistance levels may hold further gains in check

* Brazil Bovespa up 0.86 pct, Mexico IPC up 1.13 pct
(Updates to close)

By Michael O’Boyle and Luciana Lopez

MEXICO CITY/SAO PAULO, March 30 (Reuters) – Latin American
stocks rose to a two month high on Wednesday on hopes the
recovering U.S. economy will offset global weakness, but key
technical levels could limit gains.

The MSCI Latin American stocks index (.MILA00000PUS: Quote, Profile, Research) rose
1.8 percent in its biggest one-day jump in two months.

The U.S. labor market showed signs of further recovery in
March, and investors are hoping upcoming earnings reports could
further boost confidence and help counter recent concerns about
Japan’s disasters and unrest in the Middle East.
[ID:nN30275708]

“The market is betting that the U.S. recovery is strong
enough that the global slowdown will not have that much impact,
as long a U.S. consumption remains strong,” said Jaime
Aguilera, a strategist at HSBC in Mexico City.

Still, local indexes as well as key stock gauges in the
United States were struggling to clear resistance levels that
may block a sustained drive higher.

“We will probably see some pretty erratic behavior as we
wait for corporate results,” Aguilera added.

Brazil’s Bovespa stock index (.BVSP: Quote, Profile, Research) rose 0.86 percent to
67,997.06. But the index failed to break above resistance
around 68,000 points, keeping it within its range of the past
six weeks.

“In truth, it’s at its limit,” said Andre Luis Querne, a
partner at asset management firm Rio Gestao de Recursos. “In
recent weeks we’ve seen liquidity drop off a fair bit.”

Low volume suggests investors lack conviction in further
gains.

However, David Russell, an analyst at stocks and options
website optionMonster.com in Chicago noted that Chinese and
Brazilian exchange-traded funds have begun to outperform a
broader emerging market ETFs.

“Investors have worried for months about rising interest
rates and inflation in emerging markets but now the risk
appetite looks like it is coming back,” Russel said.

The iShares MSCI Brazil exchange-traded fund (EWZ.P: Quote, Profile, Research) jumped
1.98 percent compared to a 1.26 percent gain in iShares MSCI
Emerging Markets Fund (EEM.P: Quote, Profile, Research). The Brazil ETF lagged the
broader fund during the last twelve months.

Brazil’s central bank signaled it will soon end a cycle of
interest rate hikes despite concerns inflation will remain high
throughout 2011. [ID:nN30232552]

In Sao Paulo, shares in BM&FBovespa (BVMF3.SA: Quote, Profile, Research) rose 3.4
percent while bank Itau Unibanco (ITUB4.SA: Quote, Profile, Research) rose 2.84 percent
and rival Bradesco (BBDC4.SA: Quote, Profile, Research) added 3.11 percent.

Mexico’s IPC index (.MXX: Quote, Profile, Research) jumped 1.13 percent to 37,210
points, rising above its 50-day simple moving average. The
index had been struggling to break through the 37,000 level
after a rally last week.

Shares of telecommunications giant America Movil (AMXL.MX: Quote, Profile, Research)
added 1 percent. Shares of the country’s leading retailer,
Walmex (WALMEXV.MX: Quote, Profile, Research), rose 1.8 percent.

America Movil said on Wednesday that rising demand for data
services will drive growth across the region. [nN30159393]

Unexpectedly strong Mexican economic activity in January,
released on Monday, showed the service sectors growth is
starting to catch up with the recovery seen in manufacturing
and exports.

“We are starting to see signs of domestic growth and this
should be enough to at least give the Mexican market some
stability,” HSBC’s Aguilera said. Until the rally that started
last week, Mexican stocks had been in a steady downtrend since
January.

Chile’s IPSA index (.IPSA: Quote, Profile, Research) rose 0.80 percent, also trading
within the tight range of the past week.

The index closed just below resistance around 4,600 points
that has limited recent gains after the gauge saw its best week
in 22 months last week.

Shares of retailer Falabella (FAL.SN: Quote, Profile, Research) rose 1.88 percent as
Banco Santander Chile (STG.SN: Quote, Profile, Research) climbed 2.52 percent.
(Additional reporting by Doris Frankel in Chicago; Editing by
Andrew Hay)

EMERGING MARKETS-Latam stocks hit 2-mo high to test key levels