March 5, 2018 / 5:15 PM / a year ago

EMERGING MARKETS-Brazil equities mixed as corruption probe weighs

    SAO PAULO, March 5 (Reuters) - Brazil's benchmark Bovespa
index was roughly flat on Monday, underperforming some other
major Latin American equities markets despite general market
optimism, after new corruption revelations sent shares in food
companies plummeting.
    Early on Monday, Brazilian federal police said they arrested
the former chief executive of food processor BRF SA
on charges that he and other executives were aware that the
company committed fraud in trying to avoid food safety checks.

    Police said the charges were part of a new phase in the
so-called 'weak flesh' corruption investigation, which caused 
havoc last year on the sector and temporarily closed export
markets to Brazil, the world's largest beef and chicken
    By afternoon, BRF shares had dived 15.8 percent, taking 227
points off the Bovespa. Shares of asset manager Tarpon
Investimentos SA, whose largest investment is BRF, 
fell 18 percent, their largest ever drop, after the arrest of
Pedro Faria, former chief executive at BRF and currently a
partner at Tarpon.
    Shares in Brazilian food companies JBS SA and
Marfrig Global Foods SA also took a hit, falling 5.2
percent and 1.7 percent, respectively.
    As a whole, the Bovespa was trading up 0.14 percent in the
afternoon, as the index was supported by shares of state-run oil
major Petroleo Brasileiro SA, known as Petrobras,
whose preferred and common shares had jumped 2 percent and 2.3
percent, respectively.  
    Various sectors such as telecoms, finance, and consumer
discretionary were in the black due to general optimism
regarding the possibility of monetary easing in Brazil and
positive developments in global commodities markets.
    That helped take the bite out of the food sector losses,
even as the Bovespa significantly underperformed equities in
Mexico and other nearby markets.
    "Here we have more and more the perception of a market
converging toward a new cut in the Selic (interest) rate," said
Vitor Suzaki, an analyst at Lerosa Investimentos. 
    "And abroad there's also the improvement of commodities,
which is buoying emerging markets."
Key Latin American stock indexes and currencies at 1636 GMT:  
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1175.73     -0.54      2.04
 MSCI LatAm                    3081.71      0.52       8.4
 Brazil Bovespa               85878.34      0.14     12.40
 Mexico IPC                   47769.54      0.47     -3.21
 Chile IPSA                    5523.22      -0.4     -0.74
 Chile IGPA                   27697.63     -0.37     -1.01
 Argentina MerVal             32246.72      1.08      7.25
 Colombia IGBC                11298.75      0.27     -0.63
 Venezuela IBC                 4296.88      3.24    -86.45
 Currencies                              daily %     YTD %
                                          change    change
 Brazil real                    3.2534     -0.13      1.84
 Mexico peso                   18.8930     -0.44      4.27
 Chile peso                     598.52     -0.01      2.69
 Colombia peso                 2849.85      0.57      4.64
 Peru sol                        3.247      0.28     -0.31
 Argentina peso                20.2100      0.45     -7.97
 Argentina peso                  20.37      0.15     -5.60

 (Reporting by Gram Slattery and Flavia Bohone
Editing by Frances Kerry)
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