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US, EU trade talks bolstered by Trump's agreement with

Japan

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Brazil to ease total spending curbs

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America Movil swings to profit in second quarter

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MSCI Latam stocks advance 1.8%

(Updates with afternoon levels)

By Purvi Agarwal and Ragini Mathur

July 23 (Reuters) -

An index tracking major Latin American currencies advanced

to a two-week high on Wednesday, as risk sentiment improved

after the U.S. struck a

trade deal

with Japan and drew closer towards a similar agreement with

the European Union.

MSCI's index tracking Latam currencies

jumped 0.6%, hit a two-week peak and was rising for the fifth

consecutive day against a softer dollar.

On Tuesday, the U.S. signed a deal with Japan to lower hefty

duties on Japanese imports and secured a $550 billion package of

U.S.-bound investment and loans from Tokyo.

Additionally, on Wednesday, two European Union diplomats

said that the bloc is heading towards a trade deal with

Washington that would result in a broad 15% tariff on EU's

exports to the United States.

The deals raised investor expectations that other top trade

partners could also secure agreements with the U.S. ahead of the

August 1 deadline when the U.S. tariffs are expected to kick in.

The Philippines and Indonesia were among the latest emerging

market countries to strike deals with the U.S. and investors are

also keen on a potential deal with India.

"The deal (between the U.S. and Japan) is probably the

reason why you're seeing not only the global equity markets

rising, but also why some of the more risk-sensitive currencies

in Latin America are also performing very well. It's just a

broad boost to investor sentiment," said Brendan McKenna, an

international economist at Wells Fargo.

The trade progress sent ripples of optimism across global

markets, with MSCI's global EM stocks gauge trading

near levels last seen in January 2022.

Mexican peso firmed 0.6% against the dollar, while

the Colombian peso also gained 0.5%.

The Brazilian real strengthened 0.8% after the

government eased the total spending curbs previously deemed

necessary to comply with fiscal rules as it raised its net

revenue forecast by 27.1 billion reais ($4.87 billion) this

year.

President Luiz Inacio Lula da Silva's administration has

been trying to incorporate fiscal discipline ever since

investors sold off Brazilian assets last year, making the real

one of the worst performers in 2024.

Adding to pressures on the country, Trump earlier this month

threatened a 50% duty on Brazilian exports to the United States.

Mexico also came under fire after Trump announced a 30% levy on

its imports.

These moves put resource-rich Latin American countries,

previously regarded as comparative safe havens, in the

crosshairs of Trump's tariff salvo.

"The amount of trade deals that the U.S. has secured over

the last couple of weeks at least make a U.S.-Mexico trade deal

or some type of broader deal, a little bit more possible,"

McKenna added.

On the equities front, the index tracking Latin American

stocks advanced 1.8% and was set for its biggest

one-day gain since May 13.

Heavyweight Brazil's Bovespa gained 1.11% boosted by

a jump in financials stocks.

Mexico's America Movil and Banorte

added 4.3% and 3.4%, respectively, after their upbeat quarterly

results. The telecoms giant and the lender boosted the main

stock index, which gained 1.6%

Key Latin American stock indexes and currencies:

Latin American market prices

from Reuters

Equities Latest Daily %

change

MSCI Emerging Markets 1267.25 1.54

MSCI LatAm 2282.94 1.77

Brazil Bovespa 135529.41 1.11

Mexico IPC 56410.08 1.61

Chile IPSA 8107.78 -0.14

Argentina Merval 2077690.49 3.343

Colombia COLCAP 1720.55 -0.41

Currencies Latest Daily %

change

Brazil real 5.5204 0.8

Mexico peso 18.5306 0.61

Chile peso 948.71 0.02

Colombia peso 4039.5 0.47

Peru sol 3.5538 0.02

Argentina peso (interbank) 1258 -0.16

Argentina peso (parallel) 1290 1.53