Latin American stocks ended mixed on Friday after a one-week rally lost steam as investors waited to see if Greece would cut a deal in time to avoid a default. The MSCI Latin American stock index inched up 0.10 percent. The index jumped more than five percent for the week to four-month highs after an upbeat outlook coloured the week, fuelled in part by strong demand for European debt.
But the optimism was tempered on Friday. Greece and its private creditors were nearing an agreement to reduce the country's debt but by market close it still had not been clinched. Failure to reach terms before a Monday meeting of euro zone finance ministers could push the country to bankruptcy, sparking a sell off of riskier assets and wider global problems.
"For three days, there had been no firm decision on Greece and it caused a bit of nerves," said Carlos Hermosillo, an analyst at Banorte-IXE in Mexico City. "A lot of next week is going to depend on what happens with the Greece and the G-20." Riskier assets around the world hoped that a G20 meeting would help make available part of the $600 billion in funding the International Monetary Fund wants to backstop countries facing refinancing problems. But the meeting ended without any deal.
The Bovespa gained 0.62 percent, ending the week up more than 5 percent and hitting a more than six-month high. Steelmaker Usiminas pulled up the index, adding 4.08 percent while homebuilder rose 2.45 percent. "Our market is doing exceptionally well this year compared to other emerging markets, and there are people who don't believe that the trend will continue unbroken through the month," said Andre Perfeito, chief economist with Gradual Investimentos in Sao Paulo, which counts 2 billion reais ($1.13 billion) under management. "Though we saw a bit of profit-taking today, the trend is still positive."
Strong demand from foreign investors for Brazilian stocks has helped support the market recently, said Luiz Gustavo Pereira, an analyst with UM Investimentos in Sao Paulo. The Bovespa has seen a net foreign inflow of 3.5 billion reais in the month ending January 18, according to the exchange's website.
Mexico's IPC index slipped 0.79 percent to 37,384, its first loss in three sessions but it ended the week up about 2 percent. Profit-taking drove most of the losses but a receding of last year's deep pessimism over the debt crisis is likely to bring modest gains next week, Hermosillo said.
America Movil, the telecommunications firm controlled by billionaire Carlos Slim, drove the index lower, falling 1.59 percent, while bottling group Femsa dropped 2.27 percent. Chile's IPSA index advanced 2.2 percent, up 1.7 percent on the week. Industrial conglomerate Copec gained 1.2 percent while retailer Falabella was up 1.14 percent.