EMERGING MARKETS-Latam stocks, FX rise but post steep quarterly losses

 By Susan Mathew March 31 (Reuters) - Most Latin American stocks and
currencies rose on Tuesday, in line with broader emerging market
peers, as unexpectedly positive China economic data lifted
sentiment at the end of a calamitous quarter. Data on Tuesday showed China's March factory activity
expanded more than expected after a collapse last month, but
analysts warn that it may not be sustained in the coming months
as the coronavirus pandemic saps foreign demand. Mexico's peso was last trading 0.8% higher against a
stronger dollar in volatile trade. Mexico declared a health emergency on Monday after the
number of coronavirus infections in the country exceeded 1,000.
The government has not ordered a lockdown or other drastic
measures on concerns Mexico's already slumping economy would
take an even bigger hit. The peso is one of the worst performing emerging market
currencies this quarter, down about 21% for its steepest
quarterly loss since 1995, thanks to sliding oil prices. "Oil prices are now well below the levels that all major EM
producers require to sustain their economic models/public
finances. So, countries such as Saudi (Arabia) and Russia will
have to choose between running down reserves or significantly
cutting public spending," David Rees, emerging markets
strategist at J. Safra Sarasin Asset Management, told the
Reuters Global Markets Forum. "Neither will want to really do either, and I would not be
surprised to see some kind of deal on production amongst OPEC+.
But weak demand may prevent crude from rising strongly in the
near term, keeping petro currencies weak." On Tuesday, however, oil prices took heart from the United
States and Russia agreeing to talks to stabilize energy markets. Colombia's peso rose on the day, but the crude
exporter's currency declined about 18% on the quarter. In Brazil, the jobless rate rose in the three months through
February, data showed. President Jair Bolsonaro has been making
the case for continued economic activity to save jobs, even as
the number of infected cases in the country has risen to more
than 4,500. Brazil's Senate passed a 50 billion reais rescue
package on Monday. "The lack of action by Bolsonaro risks a major outbreak of
the virus. The public finances are not good and extremely low
rates and weak BRL dynamics mean it is hard to really get paid
for the risk," Rees said. The real gained 0.2% while stocks traded
flat. On the quarter, the currency is down almost 23% - its
worst performance since 2002, while stocks broke a six-quarter
winning streak. Global fund managers recommended increasing bond holdings in
March to the highest level in at least seven years while
buffering up on cash at the expense of equities, a Reuters poll
showed. Argentina's market were closed for a local holiday. Key Latin American stock indexes and currencies at 1431 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 849.65 2.12 MSCI LatAm 1598.29 1.09 Brazil Bovespa 74678.40 0.05 Mexico IPC 34535.13 0.98 Chile IPSA 3456.14 4.22 Colombia COLCAP 1126.63 -0.23 Currencies Latest Daily % change Brazil real 5.1844 -0.09 Mexico peso 23.5970 0.81 Chile peso 850.7 0.13 Colombia peso 4052.57 0.21 Peru sol 3.4277 0.29 (Reporting by Susan Mathew and Aaron Saldanha in Bengaluru
Editing by Paul Simao) 

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