EMERGING MARKETS-LatAm stocks hit 20-mth high

* Brazil real ends at 3-month high of 1.749 per dollar

* Mexican stocks hit new high, Brazil Bovespa tops 71,000

* EMBI+ narrows 12 bps to 231 over U.S. Treasuries

By Daniel Bases and Walter Brandimarte

NEW YORK, April 14 (BestGrowthStock) – Latin American equities
closed at their best levels in 20 months on Wednesday after
strong U.S. earnings increased risk appetite.

MSCI’s Latin American stock index (.MILA00000PUS: ) closed
up 1.53 percent to 4,311.88, marking the highest level since
August 2008.

The buying extended into the debt markets where new issues
have been heartily received in the last week, although trading
volumes have been cited by traders as being less than robust.

A combination of weak U.S. Treasuries and risk taking in
emerging debt markets caused the yield spread on the JP Morgan
Emerging Markets Bond Index Plus (11EMJ: )(.JPMEMBIPLUS: ) to
compress by 12 basis points to 231, its narrowest since
December 2007.

Mexico’s stock market reached a record high. The IPC stock
index (.MXX: ) gained 0.87 percent on the day to end at
34,113.93.

The driver in Mexico was homebuilder Homex (HOMEX.MX: ). The
stock surged 9.18 percent to 64.00 pesos after Bank of America
Merrill Lynch raised it to “buy” and said the company was one
of its top picks in Mexico. [ID:nN14245388]

However the weakness in the U.S. dollar did not translate
into gains for Latin American currencies, save for the
Brazilian real.

The real (BRBY: ) ended at a 3-month high of 1.749 per U.S.
dollar, up 0.51 percent on the day, as economists revised up
expectations for a hike in Brazilian interest rates in the face
of accelerating inflation.

“The real was supported by the positive mood abroad and by
continuous dollar inflows attracted by the country’s high
interest rates,” said Rodrigo Nassar, a trader with Hencorp
Commcor brokerage in Sao Paulo.

Due to a recent spike in inflation many economists now
expect Brazil’s central bank to raise rates this month for the
first time since the global financial crisis struck in late
2008.

Expectations are for a 75 basis points increase, the first
of a series of hikes that may take the benchmark Selic rate to
11.75 percent from its current level of 8.75 percent.

The case for rising rates was driven home by the latest
retail sales report from Brazil. It beat expectations in
February, underscoring the importance of domestic demand in the
economic recovery. Sales volumes rose 1.6 percent in February
from January, much above the 0.6 percent forecast by
economists. [ID:nN14140642]

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(Additional reporting by Michael O’Boyle in Mexico City and
Silvio Cascione Sao Paulo; Editing by Andrew Hay)

EMERGING MARKETS-LatAm stocks hit 20-mth high