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Argentina rebounds after sharp sell-off

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Brazil equities record slim gains

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Fed rate cut hopes underpin sentiment

(Updates with afternoon trading levels)

By Niket Nishant

Oct 15 (Reuters) - Latin American stocks and currencies

rebounded on Wednesday after dovish remarks from U.S. Federal

Reserve Chair Jerome Powell, while Argentine equities gained

ground following a turbulent Tuesday session.

With a 3.3% jump, Argentina's local stock index

emerged as one of the region's top gainers. Traders attributed

the rebound to portfolio buybacks following a sell-off sparked

by U.S. President Donald Trump linking Washington's financial

lifeline to President Javier Milei's midterm election prospects.

The U.S. again purchased Argentine pesos in the open

market on Wednesday, Treasury Secretary Scott Bessent told

reporters, adding that the department was working with banks and

investment funds to create a $20 billion facility to invest in

the South American country's sovereign debt.

The Argentine interbank peso ended down 1.3% on

the day.

"Any political setback would likely bring FX stress back,

hitting banks and consumer-focused sectors first," said Matthew

Tuttle, CEO of Tuttle Capital Management.

The Brazilian real rose 0.5% against the dollar while

the Bovespa index added 0.7%, as investors eyed planned

discussions of fiscal measures.

Brazil's government said it will begin talks on new ways to

offset Congress' decision to shelve a tax overhaul that was

crucial to the target of eliminating the primary deficit this

year.

Data released on Wednesday also showed that retail sales

volumes in Latin America's largest economy rose 0.2% in August

from a month ago, in line with analyst expectations.

FED CUES, STEADY GEOPOLITICS LIFT SENTIMENT

Dovish cues from the Fed generally pressure the U.S. dollar

globally, with the broad index down 0.3%, easing strain

on emerging market currencies and drawing investors toward

riskier assets.

A softer dollar also cuts borrowing costs on dollar debt,

offering relief to indebted economies and firms. Latin American

economies are major commodity exporters and a weaker greenback

also underpinned prices of crude oil and copper.

MSCI's gauge for Latin American equities

rose 1.5%, while a parallel index tracking regional currencies

was up 0.7%.

Calmer geopolitics particularly in the Middle East further

buoyed risk appetite, with the shift visible across equities and

debt. Israel's and Egypt's bonds

maturing in 2050 gained.

Senegal's international notes also rallied sharply after IMF

chief Kristalina Georgieva pledged to step up talks on a new

Fund-supported program for the West African nation.

Mexican stocks rose 1.2%, while the peso added

0.1%. Local investors focused on the first reports of

third-quarter corporate earnings season.

Shares of telecom giant América Móvil were among

the best performers, up 2.2% after it reported a more than

threefold increase in quarterly profit on Tuesday.

Peru stocks rose 0.6%. The country is a

major exporter of copper, which rose on Wednesday.

Some analysts said Latin American assets may continue to

perform strongly as carry trade opportunities widen, though

political risks and uneven fiscal outlooks could limit gains.

Carry trade involves investors borrowing cheaply in dollars

and chasing higher yields in emerging markets.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1365.25 1.96

MSCI LatAm 2466.18 1.47

Brazil Bovespa 142677.52 0.7

Mexico IPC 61501.85 1.18

Chile IPSA 9079.92 0.74

Argentina Merval 1946432.0 3.3

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Colombia COLCAP 1890.97 -0.04

Brazil real 5.456 0.47

Mexico peso 18.478 0.08

Chile peso 960.52 0.06

Colombia peso 3893.25 0.75

Peru sol 3.3989 0.73

Argentina peso 1378 -1.31

(interbank)

Argentina peso (parallel) 1430 -0.70