November 27, 2017 / 2:34 PM / a year ago

EMERGING MARKETS-Brazil stocks fall on pension reform jitters; Mexico peso up

    By Bruno Federowski
    SAO PAULO, Nov 27 (Reuters) - Brazilian stocks fell on
Monday as traders feared the government might have to weaken
pension legislation further to ensure its approval in Congress.
    President Michel Temer's administration agreed last week to
soften its controversial plan to streamline the social security
system after facing strong opposition from lawmakers.
    That proposal would generate fiscal savings of about 60
percent of the government's original proposal, down from 75
percent under a previous version.
    Investors widely see the bill as necessary to curtail rising
public debt and to allow the government to meet fiscal targets. 
    Temer's allies in Congress have acknowledged that the plan
might be watered down again to guarantee its approval in the
lower house this year.
    In a report, analysts at Magliano Corretora brokerage said
they expected stock market volatility to spike until the pension
reform plan goes to a vote in early December.
    The benchmark Bovespa index fell 1.2 percent on
Monday, dragged down by blue-chips such as miner Vale SA
 and lenders Banco Bradesco SA and Banco do
Brasil SA. State-controlled oil company Petróleo
Brasileiro SA tracked crude prices lower.
    Shares of phone carrier Oi SA, which
are not part of the benchmark index, fell after news of Chief
Executive Officer Marco Schroeder's resignation.
    In a client note, Credit Suisse analysts said the move
should make it harder to find a restructuring proposal that will
please all shareholders, heightening the chances of a government
intervention as Oi struggles to emerge from bankruptcy
    The Brazilian real firmed 0.4 percent, in line with
the Mexican peso. Both benefited as growing doubts
about the U.S. government's ability to implement a tax overhaul
weakened that nation's currency globally. 
    Investors also cheered reports that Mexican Finance Minister
Jose Antonio Meade might announce his intention to seek the
presidency after resigning on Monday.
    Officials say his reputation for honesty and cross-party
appeal will be vital if he hopes to defeat Mexico City mayor
Andres Manuel Lopez Obrador in a presidential race. 
    Obrador, who has captained a populist platform that
investors fear could stir tensions with the U.S. government, has
been leading polls for next year's elections, set to be the most
competitive in decades. 
    Key Latin American stock indexes and currencies at 1335 GMT:
 Stock indexes                              daily %   YTD %
                                             change  change
 MSCI Emerging Markets             1146.50    -0.67   33.86
 MSCI LatAm                        2803.28    -0.52   20.39
 Brazil Bovespa                   73295.96    -1.16   21.70
 Chile IPSA                        5030.73    -0.19   21.18
 Chile IGPA                       25323.58    -0.17   22.13
 Venezuela IBC                      752.00     5.61  -97.63
 Currencies                                 daily %   YTD %
                                             change  change
 Brazil real                        3.2192     0.38    0.93
 Mexico peso                       18.4905     0.43   12.19
 Chile peso                          634.4    -0.06    5.72
 Colombia peso                      2976.9     0.06    0.83
 Peru sol                            3.236     0.03    5.50
 Argentina peso (interbank)        17.3400     0.12   -8.45
 Argentina peso (parallel)           18.02     0.44   -6.66
 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn)
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