June 5, 2019 / 7:45 PM / 19 days ago

EMERGING MARKETS-Most Latam currencies weaken, Brazil's real hit by data

 (Recasts, updates prices, adds graphic, quote by fund manager)
    By Aaron Saldanha
    June 5 (Reuters) - Most Latin American currencies fell on
Wednesday, with Brazil's real dipping on weak local data, while
Mexico's peso bucked the trend on optimism over a deal to avert
U.S. tariffs on Mexican goods. 
    MSCI's Latin American stocks index dropped
0.7%, while its index of Latin American currencies
 fell as Brazil's real weakened 0.6%
despite a weak dollar. 
    Economic activity in Brazil shrank in May, IHS Markit's
monthly purchasing managers index surveys showed, raising the
risk the economy could be back in recession.    
    Sao Paulo-traded equities fell 1%, weighed by losses
across the board.
    Common shares and preferred shares of
Petroleo Brasileiro SA (Petrobras) fell 0.4% and 0.6%,
respectively, less than the 2.2% drop in Brent crude futures
. 
    The state-run oil firm expects to narrowly win a supreme
court decision that would allow it to proceed with asset sales,
according to two company sources involved in the case, freeing
up billions of dollars.
    Vale SA fell 1.7%. The chief executive of 
Brazil's largest pension fund, Previ, told Reuters it will seek
a gradual sale of Vale shares.
    Through a holding company, Previ and other state firms'
pension funds collectively own about 20% of the mining giant,
whose shares dived in January following a deadly dam burst.
    
    Banco do Brasil slid 2.1%. Chief Executive Rubem
Novaes said there is "worry" about a potential bankruptcy filing
by Odebrecht SA, adding the construction conglomerate owes the
bank about 9 billion reais ($2.32 billion).
    Mexico's peso strengthened 0.2%, as hope grew for a
deal to avoid the United States imposing tariffs on Mexican
goods in return for Mexico doing more to halt illegal
immigration. 
    Stocks in Mexico ticked up 0.1%, as gains among
industrials were almost negated by losses among financials,
while yields on local, 10-year bonds fell 4 basis
points to 7.96%.  
    "In spite of the recent noise of tariffs in Mexico, I don't
really consider Mexico to be a higher risk local bond market,"
Cathy Hepworth, co-head of the emerging markets debt team at
PGIM Fixed Income, told Reuters.
    "From a valuation perspective, local bonds in Mexico look
okay."
    Colombia's peso softened 0.5%, weighed on by lower
oil futures, while Chile's peso dipped on soft copper
prices.
    Argentina's peso weakened 0.5%, with data showing
industrial output for April tumbled 8.8% year on year.
 
    Weaker-than-expected U.S. private jobs data increased
expectations the U.S. Federal Reserve will trim dollar borrowing
costs this year, broadly denting the greenback against the
global currencies.
   
    
    Latin American stock indexes and currencies at 1900 GMT
    
 Stock indexes                             Daily
                                               %
                               Latest     change
 MSCI Emerging Markets          1,004.08   -0.13
                                          
 MSCI LatAm                     2,706.26   -0.72
 Brazil Bovespa                96,365.21   -1.04
 Mexico IPC                    43,301.55    0.14
 Chile IPSA                     4,960.32    -0.9
 Argentina MerVal              35,185.25     1.4
 Colombia IGBC                 12,056.90   -0.83
                                                
 Currencies                                Daily
                                               %
                                  Latest  change
 Brazil real                      3.8808   -0.63
 Mexico peso                     19.5235    0.19
 Chile peso                        693.3   -0.06
 Colombia peso                   3,304.5   -0.43
 Peru sol                           3.34    0.24
 Argentina peso (interbank)      44.9000   -0.40
                                          
 


($1 = 3.8763 reais)

    
 (Reporting by Aaron Saldanha in Bengaluru)
  
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