June 13, 2018 / 3:26 PM / 8 days ago

EMERGING MARKETS-Pre-Fed jitters, local political worries drag on Bovespa

    SAO PAULO, June 13 (Reuters) - Brazil's benchmark Bovespa
index dropped on Wednesday under the weight of local
political uncertainty and ahead of a U.S. Federal Reserve
decision on interest rates this afternoon that added to market
jitters.
    In recent weeks in Brazil traders have grown increasingly
spooked by the nation's October presidential election, in which
no moderate, market-friendly candidate is gaining traction.
Additionally, the overall weakness of the current government and
expected cuts to the country's gross domestic product forecast
have dampened moods.
    With the lack of any significant positive triggers combined
with the anxiety as the Federal Open Market Committee meets, the
Bovespa slid 0.71 percent in late-morning trade, paring losses
after dropping over 1 percent earlier in the day.
    The Fed is virtually guaranteed to raise interest rates at
its two-day meeting this week, but investors want to see how the
U.S. central bank characterizes its monetary policy as borrowing
costs return to more normal levels amid an ongoing economic
expansion.
    "Attention is focused on the FOMC," said Vitor Suzaki, an
analyst at Sao Paulo-based Lerosa Investimentos.
    While losses were fairly evenly spread, the biggest loser
was food processor BRF SA, which fell 4.6 percent
after the company said was it was shutting a turkey plant due to
export restrictions.
    Among the biggest gainers was state electricity company
Centrais Eletricas Brasileiras SA, known as
Eletrobras, which climbed 2.5 percent after reports that the
government was prioritizing the sale of six distribution units,
despite an increasingly hostile political environment.
    The president of state development BNDES said on Wednesday
the government would publish the framework for an auction of the
units on Friday.
    In currency markets, Argentina's peso was the big
mover as the country's central bank pledged to sell $7.5 billion
on the spot market.
    The peso climbed 1.18 percent in morning trade.
    
    Key Latin American stock indexes and currencies at 1441 GMT:
    
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1135.35     -0.46     -1.54
                                                  
 MSCI LatAm                    2489.34     -0.55    -11.49
                                                  
 Brazil Bovespa               72238.00     -0.71     -5.45
                                                  
 Mexico IPC                   46638.52     -0.05     -5.50
                                                  
 Chile IPSA                    5538.58      -0.1     -0.47
                                                  
 Chile IGPA                   27996.24     -0.08      0.06
                                                  
 Argentina MerVal             30160.14     -1.92      0.31
                                                  
 Colombia IGBC                12270.82         0      7.92
                                                  
 Venezuela IBC                42400.26      1.38   3256.73
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.7129     -0.16    -10.76
                                                  
 Mexico peso                   20.6695      0.26     -4.70
                                                  
 Chile peso                      635.6      0.09     -3.30
                                                  
 Colombia peso                 2858.45      0.10      4.32
 Peru sol                        3.267      0.12     -0.92
                                                  
 Argentina peso                25.4500      1.18    -26.92
 (interbank)                                      
                                                  
 Argentina peso                  26.25     -0.57    -26.74
 (parallel)                                       
                                                  
 
    

 (Reporting by Gram Slattery and Paula Arend Laier; Additional
reporting by Caroline Stauffer in Buenos Aires
Editing by Jeffrey Benkoe)
  
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