A gauge for Latin American shares touched its highest level in one month on Wednesday as signs of progress in developing a coronavirus vaccine helped bring risk appetite back into the market, with currencies rising against a weaker dollar.
MSCI's index for Latin American stocks jumped as much as 3.3%, on track for its best day since early June, while its index for currencies gained 1.7%.
Markets were optimistic after Moderna Inc said on Tuesday, its experimental vaccine for COVID-19 was safe and provoked immune responses in all 45 healthy volunteers in an ongoing early-stage study.
"Hopes that a COVID-19 vaccine may be inching closer to reality have fueled a solid rebound in risk appetite today. In line with this, the USD is weaker this morning against all G10 and most EM currencies," said Ned Rumpeltin, European head of FX strategy at TD Securities.
Currencies of oil exporters Mexico and Colombia were higher on rising crude prices, even as geopolitical tensions flared.
US President Donald Trump ordered an end to Hong Kong's special status under US law to punish China for what he called "oppressive actions" against the former British colony, prompting Beijing to warn of retaliatory sanctions.
Brazil's real fell 0.3%, as investors remained cautious of the coronavirus spreading rapidly through the country and anticipated further cuts in the benchmark lending rate next month.
Sao Paulo stocks jumped amid broader market optimism even as Vale SA fell 1.2% after a Brazilian court ruled that the miner must present 7.9 billion reais ($1.47 billion) in guarantees by July 23 related to last year's Brumadinho dam disaster.
Chile's peso firmed against the dollar, with local investors closely tracking headlines around a bill moving through congress to allow citizens to withdraw 10% of their pensions in the country's Pension Fund Administrators (AFP) system.
Chilean President Sebastian Pinera on Tuesday widened emergency support for middle-class citizens hit by the coronavirus-led economic shutdown to head off legislation that would allow withdrawals from the country's private pension funds.
A Reuters poll showed a historic recession in Latin America will likely drag on before Brazil, the region's No. 1 economy, starts fixing a dire budget shortfall that tops the list of threats along with the persistent coronavirus pandemic.