August 9, 2017 / 4:15 PM / a year ago

EMERGING MARKETS-LatAm stocks, currencies down as N.Korea tensions mount

    By Bruno Federowski
    SAO PAULO, Aug 9 (Reuters) - Latin American stocks and
currencies fell on Wednesday as investors fled for safe-haven
assets amid brewing geopolitical tensions between the United
States and North Korea.
    North Korea said it is "carefully examining" plans for a
missile strike on the U.S. Pacific territory of Guam just hours
after U.S. President Donald Trump said that any threat to the
United States would be met with "fire and fury."
    Trump followed up his warning with a boast on Wednesday
about the strength of the American nuclear arsenal, although he
expressed hope it would not need to be used.
    Emerging markets suffered as investors fled to the safety of
U.S. bonds, with a widely followed measure of U.S. stock market
anxiety jumping to a one-month high.
    The Mexican peso, which is typically used as a
hedging instrument for other less liquid regional currencies,
led the losses in Latin American foreign exchange markets.
    The move came ahead of a pivotal week for the Mexican
currency as policymakers are set to begin negotiations on the
North American Free Trade Agreement between the United States,
Mexico and Canada.
    Hopes that the countries could quickly reach a beneficial
agreement have lifted the Mexican peso this year, making it one
of the world's best-performing currencies. Still, some traders
say that the peso's standing may be fragile.
    "There is risk of a selloff if NAFTA negotiations don't
progress well, although most observers don't expect such an
outcome," strategists at 4Cast wrote in a report.
    The Brazilian real slipped 0.6 percent but remained
    Hopes that President Michel Temer will manage to pass a
proposed overhaul of Brazil's pension system have kept the
currency near its strongest levels in three months but political
concerns have limited further gains. The exchange rate has
hovered around 3.15 reais to the dollar since mid-July.
    Current levels are "are pretty fair so the strategy is more
a 'selective buying' instead of a big directional trade,"
Santander director Sandro Sobral wrote in a note to clients.
    Brazil's benchmark Bovespa stock index fell 0.7
percent as risk aversion triggered profit-taking on shares of
meatpacker JBS SA after a seven-day stretch of gains.
    Shares of rental car company Movida Participações SA
, which are not part of the benchmark index, fell the
most in 11 weeks after costs and expenses hurt second-quarter
operating profit.
    Key Latin American stock indexes and currencies at 1545 GMT:
 Stock indexes                                daily %    YTD %
                                     Latest    change   change
 MSCI Emerging Markets               1066.97    -1.07    25.08
 MSCI LatAm                          2771.00    -0.81    19.35
 Brazil Bovespa                     67438.60    -0.68    11.97
 Mexico S&P/BVM IPC                 51104.24    -0.44    11.97
 Chile IPSA                          5081.10    -0.84    22.40
 Chile IGPA                         25348.78    -0.76    22.26
 Argentina MerVal                   21114.65    -0.66    24.81
 Colombia IGBC                      10816.85    -0.39     6.80
 Venezuela IBC                     187117.48     -4.9   490.18
 Currencies                                   daily %    YTD %
                                               change   change
 Brazil real                          3.1472    -0.58     3.24
 Mexico peso                         17.9785    -0.69    15.38
 Chile peso                            649.6    -0.22     3.25
 Colombia peso                       3009.99    -0.45    -0.28
 Peru sol                              3.248    -0.18     5.11
 Argentina peso (interbank)          17.8050    -0.46   -10.84
 Argentina peso (parallel)             18.34     0.33    -8.29
 (Reporting by Bruno Federowski; Editing by James Dalgleish)
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