June 29, 2020 / 2:30 PM / 12 days ago

EMERGING MARKETS-Latam markets subdued; Brazil's real recovers

    By Ambar Warrick
    June 29 (Reuters) - Brazil's real recovered from three
sessions of sharp losses on Monday, while broader Latin American
markets kept to the sidelines as a second wave of COVID-19
infections dampened sentiment.
    The real was supported by data showing Brazilian
industrial confidence rebounded sharply in June, the biggest
rise ever. Still, the readings were consistent with levels seen
in severe recession.
    The country also reported a record budget deficit for May as
the pandemic hammered tax revenues and triggered a surge in
government spending.
    Rising coronavirus cases in the United States rattled hopes
for a smooth emergence from pandemic-related lockdowns, while
the possibility of new lockdowns looked to upset already
precarious economic growth. 
    With cases in Latin America also spiking exponentially,
investors were hesitant to capitalize on momentary weakness in
the dollar by buying into regional currencies. 
    Mexico's peso fell about 0.4%, tracking softer oil
prices as concerns over demand weighed on the crude market.

   Latin American stocks and currencies had marked a third
straight week of losses as markets weighed increasing COVID-19
cases against the possibility a swift economic recovery from the
    Regional risk assets now appeared to be sticking to a tight
trading range, in anticipation of further progress against the
COVID-19 outbreak.
    "With global Covid-19 cases breaching the 10 million level
over the weekend, and global deaths exceeding half a million,
early re-openings are looking as misguided as they always did,
and threaten to send some countries/states back to re-closure,"
ING economists wrote in a note.
    Brazilian stocks gained about 0.6%, while the MSCI's
index of regional stocks rose 0.4%. 
    The BlackRock Investment Institute on Monday downgraded
emerging market equities to "underweight," citing uncertainty
over the pandemic and concerns central banks in the space may
have limited room to respond appropriately.
    Colombian and Chilean markets were closed for a holiday.
    Key Latin American stock indexes and currencies:
    Stock indexes             Latest    Daily % change
 MSCI Emerging Markets          990.84            -0.81
 MSCI LatAm                    1863.27             0.38
 Brazil Bovespa               94372.16             0.57
 Mexico IPC                   37682.06             0.67
 Argentina MerVal                    -                -
       Currencies             Latest    Daily % change
 Brazil real                    5.4479             0.30
 Mexico peso                   23.1261            -0.34
 Peru sol                       3.5278             0.00
 Argentina peso                70.3900            -0.24

 (Reporting by Ambar Warrick in Bengaluru; Editing by Andrea
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