MEXICO CITY: Latin American stocks rebounded on Tuesday from sharp tumbles in the previous session, although analysts said gains could be short-lived on continued uncertainty.
The MSCI Latin American index rose 1.23 percent in early trading, recovering from its worst one-day loss in a month.
"Exactly, its a little rebound," said Luiz Nunes, director of Claritas Wealth Management in Sao Paulo. "But it could turn around if any news comes out," he added.
With recent weak data undermining investor confidence in the global economy, he said, markets remain without a definite direction.
"It wouldn't surprise me if (Brazilian stocks) zeroed out today, nor would it would surprise me if they rose 1 percent," Nunes said.
Peruvian stocks jumped 4.61 percent, retaking some of the ground lost in a brutal 12.45 percent plunge in the previous session on a presidential election victory by leftist candidate Ollanta Humala.
Investors are worried that Humala could ramp up state interference in the economy, increase spending and impose a windfall tax on Peru's vast mining sector.
"People just want to see some signs that there is not going to be a radical departure that discourages investment," said Frederick Searby, head of Latin American equity strategy at Deutsche Bank in New York. "The market doesn't like uncertainty and this has bred a lot of uncertainty."
Those fears helped take down stocks around the region on Monday, and investors moved in to scoop up those bargains on Tuesday.
Mexico's IPC stock index advanced 0.42 percent to 34,819.01, rebounding off an October low.
But after breaking a key support level at 34,800, the IPC could fall 2 percent more to 34,000, said Invex analyst Carlos Gomez.
"It is important that this floor (of 34,000) is respected, or we could see an even bigger correction," he wrote to clients.
Brazil's benchmark Bovespa stock index advanced 1.07 percent after dropping by the most in nearly four months in the previous session. The index climbed back above support at the 14-day simple moving average.
Banking shares recovered from the Monday sell-off, with Itau Unibanco up 1.88 percent, Bradesco rising 2.50 percent and Banco do Brasil advancing 2.01 percent.
Chile's IPSA index put on 0.64 percent, trading back above its 14-day simple moving average.
That level has provided support in recent sessions even as the index has remained rangebound.
Copyright Reuters, 2011
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