* Brazil's central bank sees annual inflation at 3.1% in
late 2028
* Venezuela earthquakes pose debt restructuring risks
* Gabon's international bonds drop after Moody's cuts
outlook
(Updates with late afternoon trading)
By Avinash P, Ragini Mathur and Purvi Agarwal
June 25 (Reuters) - Most Latin American stocks rebounded on
Thursday as global risk appetite improved and currencies firmed
against a subdued U.S. dollar, while investors assessed the
Mexican central bank's decision to hold interest rates steady.
The stocks were also buoyed by rising commodity prices.
On Thursday, U.S. datashowed inflation topped 4% for the
first time in three years, reinforcing expectations that the
Federal Reserve could raise interest rates at least once this
year.
Still, optimism around AI chip stocks and a decline in oil
prices supported global equities earlier in the session.
However, global assets pared some of their gains as the rally
lost steam and oil prices reversed their declines.
MSCI's regional stocks index rose 1.6%,
while its currency index gained 0.6%, after both
gauges touched two-week lows in the previous session.
Meanwhile, thousands were feared deadin Venezuela after two
powerful earthquakes struck Caracas and surrounding areas,
further straining the country's debt restructuring efforts.
"The earthquakes likely increase the already high debt
restructuring risk and high political risk for acting President
Delcy Rodriguez," said Hasnain Malik, head of geopolitical risk
and EM equity strategy research at Tellimer.
"However, U.S. alignment likely provides a partial offset
for the pressure on the fiscal account and recent precedents
from other natural disasters in emerging markets suggest that
the impact on financial markets is limited and temporary."
In Mexico, the central bank held rates steady at 6.50%,
beginning an anticipated pause after a final rate cut in May
that concluded a more-than-two-year easing cycle.
Local stocks gained 1.6%, boosted by a 2.8% rise in
miner Grupo Mexico while the peso was up
0.6%. Both the stock index and the currency wereset for their
biggest one-day jump in two weeks.
"The balance of risks will tilt towards renewed tightening
towards the end of the year, reflecting persistent inflation
pressures and the prospect of Fed rate hikes," said Liam Peach,
senior EM economist at Capital Economics.
Brazil's central bank pushed back against market perceptions
that it had extended its monetary policy horizon, after its
latest rate decision steepened the yield curve. It also
published updated inflation forecasts showing price increases
near target by the end of 2028.
Brazil's Bovespa index advanced 1% and the real
was up 0.3%.
Colombia faces a funding shortfall of 39.6 trillion pesos
($11.55 billion) to meet its 2026 fiscal target, up from a
previous estimate of 32.1 trillion pesos, the Autonomous
Committee of the Fiscal Rule said.
Markets are watching how President-elect Abelardo De La
Espriella's administration will tackle deteriorating public
finances. His market-friendly rhetoric has helped local assets
rally, making Colombia the region's best-performing market
year-to-date.
Bogota equities were flat, while the peso
appreciated 0.3%.
Peru's right-wing presidential candidate Keiko Fujimori
maintained an unassailable lead, though the electoral authority
has yet to officially declare a winner. Lima's stocks benchmark
added 1%, while the sol was little
changed.
Elsewhere, Gabon's international bonds fell after Moody's
cut its outlook on the country's credit rating to "negative"
from "stable" citing fiscal imbalances.
Bonds due in 2031 fell as much as 1 cent on the dollar,
Tradeweb data showed. Those due in 2029 fell 0.8 cent.
Key Latin American stock indexes and currencies:
Latin American market
prices from Reuters
Equities Latest Daily %
change
MSCI Emerging Markets 1756.51 1.52
MSCI LatAm 2942.27 1.61
Brazil Bovespa 172137.35 0.96
Mexico IPC 67356.92 1.63
Chile IPSA 10748.84 0.69
Argentina Merval 3086555.2 -0.77
1
Colombia COLCAP 2270.68 -0.01
Currencies Latest Daily %
change
Brazil real 5.1798 0.3
Mexico peso 17.4893 0.6
Chile peso 920.37 -0.19
Colombia peso 3430.57 0.29
Peru sol 3.4194 -0.03
Argentina peso (interbank) 1477 0.14
Argentina peso (parallel) 1510 0
(Reporting by Avinash P, Ragini Mathur and Purvi Agarwal;
additional reporting by Shashwat Chauhan in Bengaluru; Editing
by Deepa Babington and Sahal Muhammed)
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