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EMERGING MARKETS-Latam markets up on Fed relief hopes; Chilean economy steady

Nov 2 (Reuters) - Most Latin American stocks and currencies gained on Thursday as investors were hopeful that U.S. interest rates had peaked, while Chilean markets got a lift after data reflected steady economic performance in September.

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  • Czech central bank puts off easing cycle as it holds rates
  • Chile’s economy holds steady in September
  • Latam stocks, FX up 1.7% each

MSCI’s index tracking South American stocks .MILA00000PUS added 1.7%, while a basket of local currencies .MILA00000CUS also added 1.7% against a weakening dollar by 1438 GMT.

On Wednesday, the U.S. Federal Reserve held the policy rate steady in its current 5.25%-5.50% range.

The greenback and U.S. Treasury yields eased as markets judged chair Jerome Powell’s comments were not quite as hawkish as he could have been, though he did not rule out another hike.

Meanwhile, Chile’s benchmark index .SPIPSA rose 0.1% after the central bank said economic activity remained unchanged in September from the previous year, coming in well above market forecasts as economists polled by Reuters expected a 0.8% decrease.

“Right now (Chile’s economy) is going to be primarily affected by the international flow of trade and you’re going to see some of those economic numbers be steadier than they were before,” said Juan Perez, director of trading at Monex.

Other bourses in the region Colombia’s Colcap .COLCAP added 0.7%, while Peru’s Lima general index .SPBLPGPT shed 0.1%.

South American equities had struck a rough patch for the past three months as worries of U.S. rates and an unsteady economic recovery in top-consumer China were a drag on the resources rich economies.

Meanwhile, currencies of major copper producers in the region Chile CLP= and Peru PEN= added 0.7% and 0.3% as prices of the red metal brightened amid a weakening greenback. MET/L

Oil exporter Colombia’s peso COP= strengthened 0.5% as crude prices rose on hopes of demand outlook improving following the Fed’s decision. O/R

After the session on Wednesday, Brazil’s central bank cut its benchmark interest rate by 50 basis points for the third time in a row.

Currencies and equities of the two major economies in the region, Brazil and Mexico, saw limited action as the markets were closed on account of a public holiday.

JPMorgan’s influential bond index unit put Venezuela’s sovereign bonds and the notes of its state oil firm PDVSA on an “index watch observation period” for its main emerging market EMBI index until Jan. 31.

Elsewhere in emerging markets, Czech’s crown EURCZK= strengthened 0.4% against the euro after the central bank kept interest rates unchanged, opting to wait longer before starting an easing of monetary policy expected by markets and many analysts.

“The disinflation process will temporarily stall over the remainder of this year… which will probably prompt the CNB to maintain a hawkish bias in the coming months,” Nicholas Farr, emerging Europe economist at Capital Economics said.


Reporting by by Johann M Cherian in Bengaluru Editing by Marguerita Choy

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