*TOP NEWS* Latin America

Reuters: [2008-05-19 23:16:00]

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Keywords: *TOP NEWS* Latin America 
    

Emerging debt-Argentine spreads narrow, Venezuela gains with oil

Reuters: [2008-05-19 23:11:00]

By Daniel Bases

NEW YORK, May 19 (Reuters) - Investors pushed Argentine sovereign debt higher on Monday in case a deal is made between striking farmers and the government while rising oil prices propelled Venezuelan bonds higher.

Record high oil prices viewed through the prism of energy company profits pushed stock prices higher and helped lift emerging market equity indexes to their best levels this year and in the case of Latin America another record high.

Trading volumes however were low on Tuesday, leaving price movements exaggerated, traders said. Turkey, one of the more heavily traded credits, had a market holiday that contributed to the dearth of volume.

Yield spreads on the benchmark JPMorgan Emerging Markets Bond Index Plus <11EMJ><.JPMEMBIPLUS> were unchanged at 256 basis points over slightly stronger U.S. Treasuries.

Argentine spreads narrowed by 13 basis points to 539 basis points on the JPMorgan index.

Farmers in Argentina, the world's No. 2 corn exporter and No. 3 soy supplier, went on strike for the second time in two months on May 8 over a sliding-scale export tax that farmers say effectively caps prices for their goods. A farm leader said on Monday there was consideration in the ranks to restart talks with the government.

"No one wants to be short in the event there is a resumption of negotiations between the government and the farmers. I think this is just tactical speculative flows... Any sign they are willing to move back to the table to negotiate should be interpreted positively," said Paul Biszko, senior emerging markets analyst at RBC Capital Markets in Toronto.

Argentina's benchmark Discount Bonds rose 1.0 point in price to bid 83.00 on Monday <ARGGLB33=RR>.

Venezuela's yield spread on the EMBI+ index narrowed by 7 basis points to 640 basis points as the surging price of oil - above $127 a barrel -- fills Caracas' coffers with more oil revenues.

Venezuela's benchmark 2027 bond <VENGLB27=RR> rose 0.75 points in price to bid 89.938, yielding 10.471 percent.

"Yield spreads are pretty flat and trading volumes are low. Emerging stocks are following broader market averages higher and oil is giving a boost to Venezuela," said one credit trader in New York.

The rise in oil prices and the follow-through positive impact on energy company profits was one reason cited for a rise in global stock markets.

In emerging markets, where oil is often the big export, the Morgan Stanley Capital International emerging markets stock index <.MSCIEF> climbed 0.75 percent on Monday to its best closing level since mid-December.

MSCI's Latin American stock index closed up 1.26 percent on Monday, lifting the index to its third successive record close <.MILA00000PUS>.

One market that will draw more focus in the coming months is Turkey, which faces major political upheaval if the country's Constitutional Court says the ruling AK Party and its leaders breached the nation's secular constitution by supporting Islamist activities. The AK Party denies the charges and says they are politically motivated.

A government minister, speaking to Reuters said that the Islamist-rooted AK Party now believes the chances for its survival are bleak and has begun planning how to return to power as a new movement.

(For full story, click on [ID:nL18278566])

Turkish assets have been sold off but the selling pressures have subsided for the time being. RBC's Biszko believes that may not last through through the middle of the year.

"The fact is this is still two to three months away at the earliest, so no one is really concerned about it yet. As we near closer to July or August, I think that would be the timing we would be looking at to scale down exposure," Biszko said. ((daniel.bases@reuters.com; +1 646 223 6131; Reuters Messaging: daniel.bases.reuters.com@reuters.net)) Keywords: MARKETS EMERGINGDEBT/

UPDATE 1-US urges 'tough political choices' to get Doha deal

Reuters: [2008-05-19 22:54:00]

(Adds quotes, background)

WASHINGTON, May 19 (Reuters) - The United States is prepared to make "tough political choices" to reach a world trade deal by the end of the year, if other countries do the same, a U.S. trade official said on Monday.

"Specifically, we will be looking to see how the world's largest and fastest growing economies are going to make market-opening contributions commensurate with their increasing participation and role in the world economy," Gretchen Hamel, a spokeswoman for the U.S. Trade Representative's office, said in a statement.

Hamel was responding to a set of new texts released at World Trade Organization headquarters in Geneva aimed at narrowing differences on agricultural and manufactured goods trade in the long-running Doha round negotiations.

"We are prepared to make the tough political choices necessary to conclude an agreement, as others will need to do as well," Hamel said.

The United States is under pressure in the Doha round talks to make deep cuts in its domestic farm subsidies. In exchange, it wants advanced developing countries like Brazil, India and China to open their markets to more trade.

"We are going to be studying these revised texts in the days ahead," Hamel said. "The U.S. is committed to concluding a successful Doha Round this year that achieves new market access for agricultural and industrial products and services in both developed and emerging market economies." (Editing by John O'Callaghan) ((doug.palmer@reuters.com; +1 202 898 8341; Reuters Messaging: doug.palmer.reuters.com@reuters.net)) Keywords: USA TRADE/DOHA

US urges 'tough political choices' to get Doha deal

Reuters: [2008-05-19 22:41:00]

WASHINGTON, May 19 (Reuters) - The United States is prepared to make "tough political choices" to reach a world trade deal by the end of the year, if other countries do the same, a U.S. trade official said on Monday.

"Specifically, we will be looking to see how the world's largest and fastest growing economies are going to make market-opening contributions commensurate with their increasing participation and role in the world economy," Gretchen Hamel, a spokeswoman for the U.S. Trade Representative's office, said in a statement.

Hamel was responding to set of new texts released in World Trade Organization headquarters in Geneva aimed at narrowing differences on agricultural and manufactured goods trade in the long-running Doha round negotiations. ((doug.palmer@reuters.com; +1 202 898 8341; Reuters Messaging: doug.palmer.reuters.com@reuters.net)) Keywords: USA TRADE/DOHA

Brazil steelmakers lead stocks higher, real drops

Reuters: [2008-05-19 22:40:00]

(Updates to close)

SAO PAULO, May 19 (Reuters) - Brazil stocks rose to on Monday, hitting a record high for a second straight session, buoyed by gains in steelmakers and oil giant Petrobras, while the national currency weakened as investors took profits after a rally last week.

The Bovespa index <.BVSP> of the Sao Paulo stock exchange rose 0.92 percent to 73,438.83 points. The index has gained about 14 percent since the start of the year after surging 43.5 percent in 2007.

Steelmakers Usiminas, CSN and Gerdau rose after Citigroup reiterated a "buy" rating for Brazil's steel companies on expectations that higher metals prices later this year and in 2009 will fuel earnings growth.

The currency, the real <BRBY>, weakened 0.49 percent to 1.65 per U.S. dollar, after surging 2.7 percent last week to close on Friday at its strongest level since Jan. 20, 1999.

Joao Medeiros, partner at the Pioneer brokerage, said Monday's drop was temporary.

"There were some outflows...but it's not a big shift," Medeiros said.

Interest-rate futures <0#DIJ:> on the BM&F commodities and futures exchange were mostly higher after economists in a weekly central bank survey raised their forecast for the benchmark IPCA consumer price index for 2008.

At the stock exchange, steel shares surged for a second session after Citigroup's recommendation for the steel sector, even after more than 50 percent gains for several stocks this year.

Gerdau <GGBR4.SA>, Brazil's biggest producer of long-rolled steel, soared 3 percent to 82.44 reais, while CSN <CSNA3.SA> gained 1.28 percent to 84.37 reais and Usiminas <USIM5.SA> climbed 1.5 percent to 94.6 reais.

State-controlled oil giant Petrobras <PETR4.SA> jumped 3.84 percent to 50 reais as international crude prices firmed after OPEC said it was unlikely to boost oil supply.

Petrobras also said on Monday an onshore well struck oil in the Espirito Santo basin, but it was too early to estimate the reserves or production viability.

Real estate developer Rossi Residencial <RSID3.SA> slumped 5.33 percent to 14.75 reais. Deutsche Bank cut its recommendation for Rossi shares to "hold" from "buy," citing "overall low earnings estimate visibility and confidence due to poor communication of anticipated financial performance."

Deutsche also cut its 12-month price target for Rossi shares to 19.3 reais from 25 reais. (Reporting by Elzio Barreto and Fabio Gehrke; Editing by Leslie Adler)

((elzio.barreto@thomsonreuters.com; +55 11 5644-7725; Reuters Messaging: elzio.barreto.reuters.com@reuters.net)) Keywords: MARKETS BRAZIL/