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Brazil's service sector beats forecasts

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Brazil's c.bank had no reason to intervene in FX

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Itau Unibanco ( ITUB ) shares at all-time high

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Stocks up 1%, FX up 0.1%

(Updated at 3:16 p.m ET/1916 GMT)

By Lisa Pauline Mattackal and Ankika Biswas

Aug 13 (Reuters) - Latin American assets broadly rose on

Tuesday after soft U.S. inflation data bolstered hopes of an

early easing of interest rates in the world's largest economy,

while markets in Brazil jumped after services activity touched a

record high in June.

Ahead of closely watched consumer price inflation data due

Wednesday, U.S. producer prices increased less than expected in

July which lifted hopes for a bigger interest rate cut at the

Federal Reserve's September meeting.

Markets are hoping for a total of around 100 basis points

worth of rate cut by the year's end, as per LSEG data.

The MSCI index tracking Latin American stocks

jumped nearly 1%, touching a near one-month

high, while the currencies gauge rose 0.14%.

Brazil's real touched a near one-month high against

the dollar, up about 0.8% after data showed the service sector

rose 1.7% in June from the month prior, beating expectations for

a 0.8% rise.

Brazil's central bank governor noted that the real had

experienced "accelerated weakening," but said the central bank

has managed to drive the disinflation process with minimal

impact on economic activity.

The Bovespa index jumped 0.9% to its highest since January,

led by gains in banking stocks like Itau Unibanco ( ITUB ),

whose preferred shares touched an all-time high. CSN Mineracao

was the biggest gainer on the index, jumping over 7%.

"We expect services activity to benefit from continued

strong fiscal stimulus, the generous increase in the minimum

wage, the turnaround in the credit cycle and solid real

household disposable income growth," said Goldman Sachs

analysts.

Among other Latin American bourses, Colombia's main index

rose 0.7% and Mexican stocks jumped 1%.

Mexico's peso gained 0.2% against the dollar after

falling more than 1% in the previous session.

The dollar had briefly weakened against most Latin American

currencies in early trade after the U.S. data, before climbing

back up. Colombia's peso was up 0.5%, and Chile's peso

rose 0.4% against the greenback even as copper prices pulled

back.

Emerging market assets have steadily recovered from a steep

selloff last week, with worries about a slowdown in the U.S.

economy easing even as traders have increased bets on a 50 basis

point rate cut at the Fed's next meeting.

The Japanese yen has also weakened this week, helping

high-yielding currencies such as the Mexican peso which were hit

hard last Monday as crowded yen-funded carry trades unwound.

Chinese industrial output and U.S. retail sales data later

in the week will be closely watched for clues on global economic

performance.

Meanwhile, Latin America and Caribbean economies are

expected to grow an average of 1.8% this year, less than

previously forecast, amid global geopolitical uncertainty and

tight financial conditions, the United Nations' economic

commission for the region said.

Key Latin American stock indexes and currencies by 1916 GMT:

Equities Latest Daily % change

MSCI Emerging Markets 1072.75 0.34

MSCI LatAm 2280.73 0.98

Brazil Bovespa 132287.57 0.89

Mexico IPC 53569.75 1

Chile IPSA 6355.36 0.46

Argentina Merval 1597587.75 0.546

Colombia COLCAP 1339.19 0.67

Brazil real 5.4555 0.77

Mexico peso 19.0073 0.27

Chile peso 930.43 0.41

Colombia peso 4030 0.49

Peru sol 3.7485 -0.55

Argentina peso (interbank) 939 0

Argentina peso (parallel) 1335 1.498127341