February 1, 2019 / 3:05 PM / 4 months ago

EMERGING MARKETS-Latam FX weakens; Brazil stocks rise as Congress returns from recess

    By Agamoni Ghosh
    Feb 1 (Reuters) - Latin American currencies slipped on
Friday, hurt by weak factory numbers in Asia and Europe even
though the U.S. dollar weakened, but losses were limited by
hopes for easing of global trade tensions and strong U.S. jobs
data.
    Stocks in Brazil rose ahead of the Congress' return from an
end-of-year break and discuss President Jair Bolsonaro's
ambitious pro-market reforms.
    Brazil's real retreated from three-month highs, in
line with most emerging market currencies as investors were
cautious after data showed factory activity across major  
economies in Asia and Europe slowed, adding worries to earlier
signals of a global slowdown.
    The currency was, however, on track to post weekly gains as
expectations from the government on pension reforms remained
high. 
    Mexico's peso was on track to snap a nine-week streak
of gains as a Fitch downgrade of debt-laden state oil firm Pemex
left investors worried about the country's sovereign debt
rating.
    The Chilean peso was marginally lower dragged down by
a drop in the price of copper, the country's main export.
    Meanwhile, stocks in Sao Paulo's benchmark index
rose 0.4 percent as market participants keenly watched political
developments related to election for key posts in the Congress
and discussion of highly anticipated pro-market reforms by
Bolsonaro. 
    The Bovespa, one of the best performers across the globe
this month, did not show strong signs of ending higher for the
week, pulled down mainly by iron-ore miner Vale,
which shed close to 25 percent as the week started.
    The disaster-tainted miner experienced its worst week on
record after a dam burst at one of its mines in Brazil that is
expected to have taken the lives of an estimated 300 people.    
    Investors in the region also watched developments in
Venezuela as global jostling further intensified between
countries that want President Nicolas Maduro in power and those
trying to force him to resign, as opposition leader Juan Guaido
made overtures to his rival's allies Russia and China.

    Fund managers on Friday told Reuters that JP Morgan has kept
dollar-bonds of Venezuelan state-oil firm PDVSA in its emerging
market bond indexes in a monthly rebalancing.
    Trading volumes of those bonds had dived following U.S.
sanctions, prompting speculation that their low liquidity would
result in their ejection from the widely followed indexes.

    Key Latin American stock indexes and currencies at 1430 GMT
 Stock indexes                             daily %
                               Latest       change
 MSCI Emerging Markets           1049.88         0
                                          
 MSCI LatAm                      2934.79     -0.43
                                          
 Brazil Bovespa                 97796.93      0.41
                                          
 Mexico IPC                            -         -
                                          
 Chile IPSA                      5429.32      0.44
                                          
 Argentina MerVal                      -         -
                                          
 Colombia IGBC                         -         -
                                          
                                                  
 Currencies                                daily %
                                            change
                                  Latest  
 Brazil real                      3.6693     -0.34
                                          
 Mexico peso                     19.1377     -0.17
                                          
 Chile peso                        655.2     -0.03
                                          
 Colombia peso                         -         -
 Peru sol                              -         -
                                          
 Argentina peso (interbank)            -         -
                                          
 
 (Reporting by Agamoni Ghosh in Bengaluru; Editing by David
Gregorio)
  
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