Latin American stocks rose on Friday, but the region's equities were still seen vulnerable to concerns about rising inflation in Brazil and worries US growth could be slowing. The MSCI Latin American index rose 1.42 percent. However it closed the month with only a 0.4 percent gain after falling off its highest since June 2008 in early April.
Brazilian stocks bounced higher after falling to their lowest intraday level since mid-February the previous session. Equities in Latin America's top economy have suffered due to worries inflation may be escaping the control of the central bank, which could lead to interest rate hikes above expected levels to curb growth.
Next week there is a risk industrial production may not slow as much as expected while inflation data could come out higher than expected, said Roberto Padovani, an emerging markets strategist at WestLB in Sao Paulo. "The central bank may have to react with a longer cycle of hikes than expected," Padovani said.
Brazil's Bovespa stock index rose 0.7 percent, helped by a 6.46 percent gain in Lojas Americanas, Brazil's largest discount retailer. Lojas reported a 29 percent rise in first quarter net income on Thursday. However, the Bovespa posted a 3.6 percent slump for the month. This week the central bank said interest rates would remain high for a long time as it grapples with strong inflation.
Investors this year have been pouring into the stock markets of developed economies, such as the United States, as fears of higher inflation, rising interest rates and slower growth have weighed on major emerging markets. Despite the slump through the beginning off the year, Latin American markets remain relatively close to record highs.
"We may have had too much euphoria in the country," Padovani said. "Since Brazil is expensive, people are thinking about taking profits and looking for more defensive positions in other countries." Mexico's IPC stock index rose 0.65 percent as shares in regional telecommunications giant America Movil rose 1.35 percent ahead of its earnings report on Monday. The gauge clocked a monthly loss of around 1.3 percent.
Further signs of softness in the economy of the United States could hurt Mexican stocks going forward. Data on Thursday showed US economic growth had slowed and the labour market may be weakening. "Most of the risk is focused on US growth," said Rogelio Gallegos, a fund manager at Actinver in Mexico City. "If we do not see a downtrend in the data, we will see markets going up."
Peru's stock market rose for the third straight session, helped by polls that showed a narrowing lead of left-wing nationalist presidential candidate Ollanta Humala. The country's main stock index added 3.5 percent, but it was still headed for a 10.6 percent loss for the month, its biggest monthly loss since October 2008, due to concerns Humala could win and potentially roll back years of free-market reforms if elected.
Chile's IPSA index rose 1.36 percent as Chilean fertiliser, lithium and iodine producer Soquimich rose 3.78 percent. The IPSA has mounted its second month of strong gains, heading for an around 4.2 percent gain in April. However, initial public offerings due next month could weigh on the country's relatively small stock market as investors sell holdings to make room for the new issues.