* Brazil's consumer confidence jumps in April
* Mexico's economy likely slowed during the first quarter
-poll
* Peru's sol set for best day in a year, bounces off record
lows
(Recasts with Fed meeting, updates prices)
By Ambar Warrick and Shashank Nayar
April 28 (Reuters) - Latin American stocks and currencies
extended gains to a three-month high on Wednesday after dovish
signals from the U.S. Federal Reserve hit Treasury yields and
brightened the outlook for risk-driven assets.
MSCI's index of Latin American currencies
jumped 1.1% to its highest level since late January, after the
Fed held interest rates and its monthly bond-buying program
steady, and gave no sign it was ready to tighten policy.
Treasury yields had dropped sharply after the statement.
"The Fed recognized the swift economic recovery continues to
raise inflation concerns amongst market participants, but they
haven't flinched on their stance that upticks of inflation
brought on by the recovery will remain transitory," said Charlie
Ripley, Senior Investment Strategist for Allianz Investment
Management.
While concerns over increased U.S. inflation had pushed up
Treasury yields and pressured emerging market assets earlier
this year, constant dovish signals from the Fed had helped
capital flows return to EM forex and debt.
Latam stocks rose 1.5% to their highest
since late January, with Brazil's Bovespa leading gains
in the region.
Broader emerging market currencies were at
two-month highs, while stocks hit a 1-1/2 month high.
Brazil's real rose 1.8% to its highest point
since mid-February after April consumer confidence marked its
biggest rise in nine months. The government also increased its
emergency cash buffer in March to cover future debt obligations,
as a second wave of the COVID-19 pandemic tore through the
country.
"The imminent passing of the budget for 2021, officially
respecting the spending cap and the affirmation efforts that the
tax and administrative reforms would be stepped up, supported
BRL-positive sentiment," said Melanie Fischinger, an emerging
markets analyst at Commerzbank.
Peru's sol was the best performer in Latam on
Wednesday, surging 1.9% in what was set to be its biggest daily
gain in a year.
The currency was recovering from several sessions of record
lows, spurred by concerns over a socialist presidency.
Currencies of oil exporting countries, Mexico and Colombia
gained 0.7% and 0.6% respectively, tracking higher
crude prices.
Still, a Reuters poll showed the Mexican economy likely grew
only marginally during the first quarter of the year due to the
impact of the coronavirus pandemic and energy shortages in
February.
Chile's peso rose 0.8%, even as copper prices eased
from 10-year highs. But analysts at Goldman Sachs joined others
predicting a copper rally to record levels.
Latin American stock indexes and currencies:
Latest Daily % change
MSCI Emerging Markets 1367.27 0.39
MSCI LatAm 2450.24 1.53
Brazil Bovespa 121144.73 1.47
Mexico IPC 48498.89 -0.64
Chile IPSA 4590.09 -3.35
Argentina MerVal 49972.06 2.063
Colombia COLCAP 1283.80 -0.72 Currencies Latest Daily % change
Brazil real 5.3654 1.77
Mexico peso 19.9030 0.69
Chile peso 695.9 0.79
Colombia peso 3694.13 0.59
Peru sol 3.7687 1.86
Argentina peso 93.4300 -0.10
(interbank)
(Reporting by Shashank Nayar in Bengaluru; editing by Philippa
Fletcher and Grant McCool)
