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Latin American stocks rise on GM financing arm aid

Latin American stocks rise on GM financing arm aid

Latin American stocks rose slightly Tuesday as investors bet U.S. assistance for GM's troubled auto financing arm would boost Mexican exports and help stem a deeper global recession.
Mexico's IPC stock index rose 0.1 percent to 22,420 on news that the U.S. government will provide $5 billion to General Motors Corp.'s troubled financing arm, GMAC Financial Services LLC, helping it to boost sagging auto sales by freeing up credit for car loans.
GM employs about 12,700 people in Mexico, where the auto industry is responsible for a fifth of exports and 3 percent of gross domestic product.
Still, Tuesday's record-low U.S. consumer confidence report sank export forecasts in Mexico, pushing the peso to 13.8 to the U.S. dollar, its weakest level since Nov. 21. The U.S. buys about 80 percent of Mexican goods sold abroad.
Brazil's benchmark Ibovespa index meanwhile climbed 1.3 percent to 37,550. Shares in state-run oil company Petroleo Brasileiro, which comprise 15 percent of the index, rose 1.4 percent to 22.84 reals as gains in Brazil's currency offset a dip in world oil prices. The real strengthened 1.5 percent to trade at 2.3 to the U.S. dollar.
Chile's IPSA index gained 0.1 percent to 2,376, while Peru's IGBVL rose 0.03 percent to 7,018 and Colombia's IGBC increased 0.5 percent to 7,561.
U.S. consumer confidence, sapped by rising unemployment, also helped sink oil prices 2.8 percent to $39.03 a barrel. Mexico, Brazil, Venezuela, Colombia and Ecuador all produce significant amounts of crude.
Latin America's commodity-heavy stock indices had been buoyed by a 6.5 percent increase in oil prices on Monday, as Israel's attack on Hamas targets in the Gaza Strip raised concern that output might be disrupted in the Middle East.
Analysts suggest that plunging oil prices signal a longer-than-expected recession.
The world financial crisis battered Latin American stocks and currencies in 2008, as foreign investors dumped local assets to cover losses at home and sales dropped at the region's biggest exporters amid falling prices for oil, copper, soy and other commodities.
Oil prices have declined more than 73 percent since topping $147 a barrel on July 11 as the slowing world economy curbed demand.
Brazil's Ibovespa has lost about 37 percent of its value and its currency has weakened by 43 percent since July 11. Mexico's IPC index has lost about 19 percent and the peso 34 percent in the same period.
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Associated Press Writer Julie Watson contributed to this report from Mexico City.