MEXICO CITY (AFX) - Latin American stocks closed higher Wednesday, buoyed by a moderate inflation report in Brazil, although investors remained cautious in advance of an interest rates decision in the U.S. and elections in Mexico.
Brazil's benchmark Ibovespa index closed 1.33 percent higher at 34,835 points, from Tuesday's close at 34,376 points.
Trading volumes remained moderate, reaching 2.88 billion Brazilian reals (US$1.3 billion, euro1.03 billion).
Brazil's Central Bank, in its second-quarter inflation report, actually raised its estimate for the benchmark IPCA inflation index to 3.8 percent for 2006 from 3.7 percent, and for 2007 to 4.2 percent, up from 3.9 percent.
But both figures are still well below the bank's central IPCA inflation target of 4.5 percent for both 2006 and 2007.
Expectations for higher U.S. interest rates have hurt emerging-market countries in recent weeks.
The real closed at 2.22 reals to the dollar, stronger than Tuesday's close at 2.24 reals per dollar.
Mexican stocks also closed higher on low volume Wednesday. The benchmark IPC index of the 35 most-traded companies rose 0.4 percent to 18,101.83.
Traders expect activity to be light ahead of Sunday's presidential election to choose a successor to President Vicente Fox. The most recent polls showed a tight race between leftist candidate Andres Manuel Lopez Obrador and conservative Felipe Calderon.
The peso closed at 11.41 to the dollar, stronger than Tuesday's 11.45 close.
Chile's 40-share benchmark Ipsa index closed at 2,070.84 points, up 0.2 percent, and Argentina's benchmark Merval Index rose 2.09 percent to reach 1,632.25 points.
'This was a general rebound among Latin American markets, especially in Argentina and Brazil,' said Pablo Tavelli, an analyst in Buenos Aires with Banco Santander.
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