December 19, 2017 / 10:04 PM / 9 months ago

EMERGING MARKETS-Brazil's Bovespa down on worries over fiscal health

 (Updates prices)
    SAO PAULO, Dec 19 (Reuters) - Brazil's Bovespa equities
index fell sharply on Tuesday on concerns over the nation's
fiscal health after a court struck down a measure intended to
control government spending.
    On Monday, Brazil's Supreme Court suspended the effects of a
decree by President Michel Temer, which would have put off
adjustments to the salaries of federal workers for a year. That
came as Brazil's Finance Minister Henrique Meirelles begins
talks with major ratings agencies in a bid to avoid a credit
downgrade, after lawmakers delayed voting on a key pension
reform.
    "Another blow to fiscal adjustment, given that the measure
should bring 4.4 billion reais ($1.34 billion) of savings next
year," analysts at local brokerage Coinvalores said of the
Supreme Court decision in a note to clients.
    Meirelles said in a radio interview on Monday that he will
tell major ratings agencies that delaying a vote on a pension
bill seen important to shoring up the nation's fiscal accounts
does not mean it will not pass. However, lawmakers have warned
that February is effectively the last chance for the unpopular
bill.
    Brazil's Bovespa dropped 0.6 percent.
    Chile's peso rose 0.19 percent on Tuesday, as markets
continue to price in the unexpectedly dominant win of investor
favorite Sebastian Pinera in elections over the
weekend.
    "Despite the fact that Sebastian Pinera's coalition will not
have a majority in Congress, the change in government presents
an opportunity to improve business confidence and should foster
a continued macroeconomic rebound," Fitch said in a
note.
    Mexico's IPC index and peso currency fell
0.45 percent and 0.74 percent, respectively, as U.S. legislators
drew closer to passing a landmark tax reform. Investors are
adopting caution due to uncertainty about how the tax reform
will affect Mexico.
    
    ($1 = 3.29 reais)
       
Key Latin American stock indexes and currencies at 2052 GMT:
 Stock indexes                               daily %     YTD %
                              Latest          change    change
 MSCI Emerging Markets            1133.11       0.24     31.09
                                                      
 MSCI LatAm                       2759.30      -0.87     18.92
                                                      
 Brazil Bovespa                  72680.37       -0.6     20.68
                                                      
 Mexico IPC                      48415.94      -0.45      6.08
                                                      
 Chile IPSA                       5588.09      -0.14     34.61
                                                      
 Chile IGPA                      28035.80      -0.09     35.22
                                                      
 Argentina MerVal                27710.17       2.11     63.79
                                                      
 Colombia IGBC                   11116.54       0.15      9.76
                                                      
 Venezuela IBC                    1290.63      -0.03    -95.93
                                                      
                                                              
 Currencies                                  daily %     YTD %
                                              change    change
                                   Latest             
 Brazil real                       3.2894       0.20     -1.22
                                                      
 Mexico peso                      19.2250      -0.74      7.90
                                                      
 Chile peso                           620       0.19      8.18
                                                      
 Colombia peso                       2968       0.24      1.13
 Peru sol                           3.281      -0.03      4.05
                                                      
 Argentina peso (interbank)       17.7000      -0.71    -10.31
                                                      
 Argentina peso (parallel)          18.11       0.77     -7.12
                                                      
 

 (Reporting by Gram Slattery; additional reporting by Julia
Love; Editing by Susan Thomas)
  
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