Latam forex, stocks extend Fed-driven rally

Most Latin American currencies extended gains on Friday after dovish signals from the US Federal Reserve, with the Brazilian real holding at over three-month highs as investors welcomed progress in the government's pension reform bill.

Brazil's markets have surged in recent days on prospects for the pension system overhaul, while signals from the Fed about potential interest rate cuts helped capital inflows into risky, emerging market assets.

The real, up about 0.4%, is on course to post gains in a week that saw the lower house of Congress pass the main text of the bill by a wide majority. It now faces a second-round vote before going to the Senate for final approval.

Speaker Rodrigo Maia said the lower house will try to conclude voting before the break for recess on July 18.

"Brazil's pension reform is moving forward more quickly than even the most optimistic forecasters expected," FX strategists at RBC wrote in a note.

The Bovespa stock index edged lower after gaining for five straight days, weighed down by banking shares.

Retailer Magazine Luiza jumped 3.5%, topping gains on the Bovespa, after the company said it approved a 1-for-8 stock split, a transaction that will keep its capital stock unchanged at 1.77 billion reais ($470 million).

The Mexican peso rose about 0.3%. Minutes from Mexico's central bank meeting showed on Thursday most policymakers recommend maintaining a cautious monetary policy stance because of mixed inflation signals.

The Colombian peso also gained, but the Chilean peso edged lower amid concerns about demand for its top export, copper.

Data showed China's unwrought copper imports in June fell 27.2% from a year earlier, as a slowdown in the world's second-biggest economy continues to weigh on demand for the metal.