EMERGING MARKETS-Mexican peso hits 10-week high on recovery hopes

    * Mexico's Q1 economic activity contracts less than expected
    * Brazil's posts record current account surplus in April
    * Investors turn "under-weight" on Brazil's real - JPMorgan
    * Chile's LATAM Airlines files for bankruptcy

    By Susan Mathew
    May 26 (Reuters) - Mexico's peso rose on Tuesday, hitting a
10-week high after economic activity contracted less than
expected in the first quarter, while broader sentiment was
lifted by hopes of a global economic recovery as countries
further eased pandemic-driven lockdowns.
    The peso jumped 1.4%, extending gains to a seventh
straight session after the GDP data, but as a coronavirus
lockdown was applied only in late March, the second quarter is
expected to bear the brunt of the shutdown in business activity.

    "The peso should be well placed to benefit from any
improvement in global growth momentum and EM risk appetite,
helped by its appealing short term valuations improving balance
of payments dynamics," said global FX strategists at JPMorgan.
    Surging copper prices lifted top producer Chile's peso
, while a recovery in oil prices led the Colombian peso
 to its highest since early March.
    Brazil's real surged 1.8% to a four-week high
as central bank data showed the country posted a record current
account surplus in April.
    The real has recently tried to rebound from record lows on
the back of higher commodity prices, but remains about 25% down
on the year amid a federal investigation into President Jair
Bolsonaro as well as a spree of ministerial resignations.
    Bolsonaro has also been criticized for his handling of the
coronavirus outbreak, with Brazil now the second-worst hit
country in terms of the number of infections.
    JPMorgan analysts said investors had turned "under-weight"
on the real for the first time since September 2018, but they
still see the currency outperforming by the end of the year as
financial markets focus on "the significant cheapness of the
currency in the medium run."
    Regional stocks tracked Wall Street higher on hopes the
global economy could emerge from what is expected to be a deep
recession as countries reopened more businesses and on hopes of
a COVID-19 vaccine.
    Brazil's Bovespa hit an 11-week high, while Mexico's
main index rose 1.3%, extending gains to a third straight
    Chile's LATAM Airlines Group SA filed for U.S.
bankruptcy protection on Tuesday, becoming the world's largest
carrier so far to seek an emergency reorganization amid the
coronavirus outbreak.
    Key Latin American stock indexes and currencies at 1056 GMT:
     Stock indexes              Latest      Daily % change
 MSCI Emerging Markets            929.68                    2
 MSCI LatAm                      1785.09                 2.82
 Brazil Bovespa                 86861.54                  1.4
 Mexico IPC                     36308.55                 1.33
 Chile SPIPSA                    3765.02                 0.36
 Argentina MerVal               41836.79                2.134
 Colombia Colcap                 1070.37                  1.2
        Currencies              Latest      Daily % change
 Brazil real                      5.3594                 1.79
 Mexico peso                     22.2375                 1.33
 Chile peso                        798.7                 0.73
 Colombia peso                   3723.41                 1.42
 Peru sol                         3.4178                 0.23
 Argentina peso (interbank)      68.2600                -0.12
 (Reporting by Susan Mathew in Bengaluru)

Source: Read Full Article