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US signals Venezuela oil sanctions relief at risk as

deadline

looms

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Brazil's IBC-Br economic activity index up in February

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Chile central bank considered 75 or 100 bp cut in April-

minutes

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Latam stocks and currencies up 0.8% each

By Bansari Mayur Kamdar

April 17 (Reuters) - Currencies in Latin America bounced

back on Wednesday, after five straight sessions of losses, as

the dollar weakened, while strong earnings reports also

supported beleaguered regional bourses.

The MSCI index for Latin American currencies

gained 0.8% by 1437 GMT after dropping 1.9% on Tuesday and

posting its worst daily performance in over a year.

The Latin American stocks index added 0.8%

and was down nearly 10% so far this year.

Both indexes had a rough start to the week as the firm

dollar pummeled riskier assets on concerns around violence in

the Middle East escalating and diminishing hopes regarding

Federal Reserve rate cuts.

Currencies of Brazil, Chile, Mexico,

Colombia and Peru gained between 0.7% and 1%

against the softening dollar after sharp losses this week.

In Chile, minutes from its April meeting showed the Central

Bank of Chile considered reducing the country's benchmark

interest rate by 75 or 100 basis points. It ended up cutting

rates by 75 bps to 6.50%.

According to the central bank, the economy is grappling with

weak domestic demand despite recent improvements. Peso

depreciation and global cost shocks have added pressure on

prices, but these are expected to ease within the monetary

policy horizon.

Strong copper prices also boosted the currency of Chile

, the top producer of the metal, and No.2 producer Peru's

sol.

The Mexican peso retreated from 17 pesos per dollar

after a member of the central bank's governing board said in an

interview the country's stubborn inflation requires cautious

monetary policy, warning it may be necessary to continue with a

restrictive policy.

Boosting sentiment in the largest economy in Latin America,

data showed economic activity in Brazil rose in line with

estimates in February from the month before, posting its fourth

straight rise.

"The headline confirms that the economy enjoyed a decent

start to the year, thanks to the boost from declining inflation,

interest rate cuts and a still-healthy labour market," said

Andres Abadia, chief Latam economist at Pantheon Macroeconomics.

"Risks remain tilted to the downside, however, particularly

over Q2, as activity in key sectors remains under strain,

necessitating further policy normalisation."

The Bovespa index ticked lower, but a 1.8% gain in

Vale capped losses after the miner reported growth of

6.1% in its first-quarter iron ore production from a year

earlier.

Petrobras shares struggled for direction after

the company confirmed late on Tuesday a Brazilian court

overturned a previous ruling from a lower tribunal that had

suspended state-run oil firm Chairman Pietro Sampaio Mendes from

his role.

Mexico's Grupo Financiero Banorte rose 1.8% on

reporting a 9% rise in first-quarter net profit from the

year-ago period, citing growth in its loan book. The stock index

gained 0.2%.

Also in focus, the Biden administration has signaled that it

could reimpose oil sanctions on Venezuela on Thursday in

response to what U.S. officials see as President Nicolas

Maduro's failure to meet his commitments for free and fair

elections this year.

Elsewhere in emerging markets, the Indonesian rupiah

hit a four-year low, extending weakness against the greenback,

while the South African rand edged higher after data

showed inflation slowed slightly more than expected in March.

Investor continued to focus on discussions between finance

ministers and central bankers attending the IMF and World Bank

Spring meetings this week.

The International Monetary Fund's Board has backed a key

change to give it more freedom to support crisis-hit countries

even if debt renegotiations with big creditor governments like

China are still ongoing.

Key Latin American stock indexes and currencies at 1437 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1012.94 0.31

MSCI LatAm 2392.43 0.74

Brazil Bovespa 124344.54 -0.04

Mexico IPC 55902.05 0.19

Chile IPSA 6425.44 -0.08

Argentina MerVal 1204309.56 0.089

Colombia COLCAP 1361.32 -0.51

Currencies Latest Daily %

change

Brazil real 5.2387 0.56

Mexico peso 16.9630 0.53

Chile peso 972.8 0.73

Colombia peso 3893.37 0.69

Peru sol 3.743 0.14

Argentina peso (interbank) 869.0000 0.00

Argentina peso (parallel) 1015 1.97