Latin America stocks bounced up on Friday after the worst weekly slide since November, but equities were facing deeper losses ahead as higher oil prices and rising interest rates could hit growth. The MSCI Latin American stocks index rose 0.22 percent and edged up from a one-month low hit in the previous session as it headed for a 3.8 percent loss for the week.
The biggest earthquake on record in Japan, the world's No 3 economy, added to concerns about higher oil prices, debt troubles in Europe, and tighter borrowing costs in emerging markets such as China and Brazil. A drop in oil prices provided a window for short-term investors to snatch up some beaten-down shares on hopes of a stronger rebound in the days ahead on any good news, but a downtrend in the region's stocks that started this year looked set to continue.
"The main issue will remain a deceleration in growth at the global level, and the quake in Japan is going to add in a bit more noise on this," said Jaime Aguilera, a stock strategist at HSBC in Mexico City. "The market is anticipating more weakness in Europe, that oil prices will hit industrialised countries, and it is factoring in greater inflationary pressures in the emerging economies," he added.
Brazil's Bovespa rose 0.65 percent, which would cut its weekly loss to around 2.2 percent. Shares of Usiminas jumped 4.47 percent on speculation that Brazil's largest maker of flat steel products could boost exports to Japan in the wake of the earthquake.
Shares of mining giant Vale rose 0.87 percent as it recovered from its lowest price since October. Societe Generale started coverage of Vale's American Depository Receipts with a "buy" rating. Policy minutes from Brazil's central bank this week pushed investors to pare back expectations of further interest rate hikes, giving some support to credit-dependent stocks.
The central bank signalled on Thursday that it could rely on lending curbs to fight inflation, pushing investors to pare back bets on further interest rate hikes. Homebuilder Gafisa rose 1.99 percent while credit card operator Cielo rose 1.51 percent. Mexico's IPC index rose 0.24 percent after, recovering from its lowest close on Thursday since November.