Latam stocks rally hits 2-1/2 year high

Latin American stocks ended their strongest week in 2-1/2 years on Friday, raised by robust US jobs data, but they could be hamstrung next week ahead of a summit meant to tackle the a eurozone crisis. The MSCI Latin American stock index advanced 0.24 percent, adding more than 10 percent this week in the biggest jump since May 2009.
Central banks around the world boosted liquidity in the global financial system, buoying global markets earlier in the week and easing fears of a world-wide credit freeze. Investors are now eyeing a make-or-break summit for the eurozone where they hope policymakers will provide strong measures to reinforce the hard-hit 17-country currency and stem a debt crisis that has rattled global markets.
"It's an important week ahead, we are going to see what European leaders do, what decisions they take and how they are going to confront the crisis," said Juan Carlos Sotomayor, an analyst at Mexico City brokerage Actinver. "If they don't do anything or don't have a clear direction, market appetite can change and turn pessimistic." German Chancellor Angela Merkel travels to Paris on Monday to outline joint proposals with French President Nicolas Sarkozy that would create coercive powers to reject national budgets and impose strong sanctions on serial deficit sinners.
But investors have been burned before. In October, the market rallied on hopes a solution to the crisis was near, only to see a credit crunch spread and debt costs soar in Italy and Spain. Sotomayor said trading volumes could fall as market players take cautious positions ahead of the summit. Early in the session, fresh data showing the US unemployment rate fell to a 2-1/2 year low cheered markets, suggesting the world's largest economy could be gaining traction.
"Employment data isn't sufficient to show the (US) economy reactivating but at the end of the day it is creating more jobs and thats a positive note," said Esteban Velázquez, an analyst at Mexico City investment firm Allianz Fondika. Mexico's IPC added 0.52 percent. The IPC gained more than 6 percent in its best week since July 2009. Mexico's central bank held benchmark interest rates steady as expected on Friday, keeping borrowing costs at 4.5 percent.
Heavyweight America Movil climbed 1.37 percent, leading gains. Miner Grupo Mexico also pulled the index higher, up 1.46 percent. Brazil moved aggressively to shield its own economy, Latin America's largest, with a slew of tax measures and an interest rate cut. Brazil's benchmark Bovespa stock index slipped 0.44 percent but added more than 5 percent for the week in its best performance since the end of October. Leading losses, PDG Realty, Brazil's biggest homebuilder declined 6 percent and card payment processor Redecard fell 6.3 percent. Chile's IPSA ended flat, edging down 0.01 percent, ending the week up 4.6 percent. Adding to the index, regional energy group Enersis was up 1.3 percent while fertiliser, lithium and iodine producer Soquimich dropped 2.15 percent.