LATIN AMERICAN MARKETS: Mexican, Brazil Stocks Rise In Relief Rally

By Carla Mozee

Major Latin American stock markets jumped Thursday, with investors finding relief from China's assurance that it's not going to rid itself of European debt investments in light of the euro-zone's fiscal crisis.

The Bovespa, tracking Brazilian blue chips, climbed 3.2% to 62,091.77. Investors also snapped up Brazilian stocks after the country's unemployment rate in fell in April, a surprise result for the markets.

Mexico's IPC rose 2.3% to 32,056.16 and Argentina's Merval bounced 5.3% higher to 2,203.99. Chile's IPSA rose 0.7% to 3,812.25.

The regional markets rose alongside U.S. stocks after China said it doesn't plan to sell some of its holdings in euro-denominated debt. The S&P 500 Index (SPX) surged 3.3% and the Dow Jones Industrial Average (DJI) leapt 285 points, or 2.9%, to 10,258.99.

"The vote of confidence that Chinese authorities gave the euro ... gave risk appetite a boost," wrote Nick Chamie, global head of emerging-markets research at RBC Capital Markets in a late Thursday note.

The euro (CUR_EURUSD) rose against the U.S. dollar for the first session in four.

The euro was pushed below a key threshold of $1.22 and investors pulled out of U.S. stocks on Wednesday after a news report that China was mulling the sale of some of its European bond holdings. But Mexican and Brazilian stocks managed to hold to higher ground despite the setback on Wall Street.

Still, fears that the European debt crisis will interrupt global economic recovery have heavily contributed to a downturn in worldwide equity markets this month. The Bovespa, for instance, is facing a loss of about 8%.

In Brazil on Thursday, the IBGE statistics agency said the country's unemployment rate fell to 7.3% last month, better than the market consensus for a rate of 7.5%. The rate registered at 7.6% in March.

Other indicators of a buoyant labor market, including business and consumers surveys, "confirm the good prospects for consumption and thus for GDP growth this year," wrote economist Luiz Cherman at Itau Securities in a note.

With concerns that the economy is rebounding from recession too strongly, the report will be considered by policy makers next week at their meeting on the key interest rate. Policy makers recently hiked the Selic rate to 9.5% from a record low 8.75%.

In trading action in Sao Paulo, shares of steel, industrial, retail, home-building and transportation stocks took part in the equities rally, with shares of air carrier Gol (GOL) up 3.3%. Steel producer Usiminas rose 4.1% and Gerdau (GGB) gained 5.4% as prices for metals rose.

Vale (RIO) stock jumped 6.3% as a unit of the iron-ore giant will resume talks with labor leaders representing striking workers at a nickel plant in Ontario, Canada. The talks with the United Steelworkers union will begin on June 4. The strike at the plant was launched last July.

In Mexico City, shares of America Movil (AMX) rose 1.5%. A spokesman for the controlling shareholder in America Movil, Carlos Slim, told Dow Jones Newswires that Slim is not in talks to buy a stake in Portugal Telecom (PT).

Portuguese newspaper Diario Economico reported that Slim was looking into the possibility of buying a stake in the company to disrupt efforts by Spain Telefonica (TEF) to win control of Portugal Telecom's stake in Vivo (VIV). Vivo is the biggest wireless provider in Brazil.

Telefonica and Portugal Telecom are joint-venture partners in Vivo. America Movil competes in Brazil through its Claro unit.