EMERGING MARKETS-Latam FX, stocks rally on economic recovery hopes

    By Susan Mathew
    May 25 (Reuters) - Latin American currencies firmed on
Monday on hopes of an economic recovery as more economies
emerged from pandemic-induced lockdowns, although simmering
U.S.-China trade tensions tempered risk appetite.
    Brazil's real surged 2.1%, extending gains to a
fourth session, while Mexico's peso appeared to be headed
for its sixth straight winning session. Chile's currency
gained 0.8%. 
    In line with broader emerging market peers, regional stocks
rallied. Sao Paulo's Bovespa index jumped 3.5% to a
12-week high, while Chilean stocks rose 1%.    
    Volumes were thin as UK and U.S. markets were closed for 
holidays in those countries.
    Data showing improving business confidence from Europe's
powerhouse, Germany, reinforced hopes that further easing of
restrictions in countries to curb the spread of the novel
coronavirus would help the global economy emerge from what is
expected to be a deep recession.
    "The low point of the slump should now be behind us and
there even is the chance for a short-lived strong rebound in the
coming months," Carsten Brzeski, chief economist for the euro
zone at ING, said of the data. 
    The regional picture remained grim, however, with Brazil on
Friday sharply revising downward its 2020 budget deficit and
national debt forecasts to record levels, reflecting the hit to
tax revenues and need for massive emergency spending caused by
the health crisis.
    With over 360,000 cases, Brazil is the second worst-hit
country globally by the COVID-19 disease caused by the virus.
Brazil's President Jair Bolsonaro has been an open critic of
social distancing protocols, calling for increased business
activity to keep the economy afloat.
    A federal investigation revealing likely abuse of power has
further hit Bolsonaro's popularity. And, several ministers from
his administration have resigned in the last two months over
differences with him.
    In Mexico, President Andres Manuel Lopez Obrador said a
slowdown in China's economy this year should allow Mexico to
attract more investment.
    U.S.-China trade tensions stewed as the White House warned
of sanctions on China as Beijing pressed ahead with a new
security law on Hong Kong that threatens the city's status as a
financial hub.
    Markets in Argentina and Colombia were closed for national
    Key Latin American stock indexes and currencies at 1424 GMT:
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets     910.93     0.63
 MSCI LatAm               1730.03     3.59
 Brazil Bovespa          85064.42     3.52
 Mexico IPC              35867.96     0.23
 Chile IPSA               3760.80        1
      Currencies          Latest   Daily %
 Brazil real               5.4565     2.11
 Mexico peso              22.6270     0.43
 Chile peso                 802.2     0.41
 Peru sol                  3.4197     0.27
 (Reporting by Susan Mathew in Bengaluru; editing by Jonathan

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