May 7, 2019 / 9:02 PM / 18 days ago

EMERGING MARKETS-Latam assets hit as trade fears make investors dial back on risk

 (Recasts throughout, updates prices, adds market strategist's
quote)
    By Aaron Saldanha
    May 7 (Reuters) - Latin American stock markets fell on
Tuesday, broadly pressured by worries over U.S.-China trade
ties, while currencies in Latin America softened against a
firmer dollar.
    U.S. Trade Representative Robert Lighthizer on Monday vowed
to continue talks but said that as of now "come Friday there
will be tariffs in place." Meanwhile, a spokesman for China's
foreign ministry said adding tariffs could not solve any problem
  
    "Yesterday markets reacted well to the trade headlines as
consensus saw the Trump tweet mostly as a negotiation tactic,"
Dirk Willer, head of emerging market strategy at Citi Research,
and Kenneth Lam, an emerging markets FX strategist, wrote in a
note.    
    "This assessment is now under review given the additional
negative comments from Lighthizer and even (U.S. Treasury
Secretary Steven) Mnuchin."
    MSCI's Latin American stocks index fell
1.6%, with declines of at least 0.8% on each country's bourse
being the norm for the day.
    MSCI's Latin American currencies index fell
0.7%, as traders scaled back riskier bets and sought out safe
havens like Japan's yen, also placing wagers on rising
currency volatility.
    Brazilian stocks dropped 0.7% on broad-based losses,
although financials slid especially sharply. The real currency
 marked time.
    Optimism among investors regarding a much-watched proposal
to reform Brazil's pension system dipped. 
    The Chamber of Deputies committee analysing the proposal's
merits began work and the rapporteur presented a plan providing
for public hearings by the end of May, but not for a voting date
for the proposal.
    State-run oil firm Petroleo Brasileiro SA saw its common
shares and preferred shares fall 1.1% and
1.6%, respectively, pulled lower by soft oil prices.

    Vale SA was little changed. While the iron ore
giant said late on Monday a court had ordered it to halt
operations at its Brucutu iron ore mining complex, consequently
higher iron ore prices helped cushion the blow.

    Mexican stocks slid 1.2%, while the peso
softened 0.2%.
    Chile's peso fell 0.9%, tracking lower prices of
copper, the country's top export, on rising trade
tensions. Data showed Chilean exports fell in April.

    Argentina's stocks fell 0.5%, while the peso
slid as risk appetite ebbed. 
    Colombia's peso weakened 1.4%, while stocks
slid 0.9%. Ecopetrol SA dropped 1%, weighed down by
weaker oil prices.  
            
    Latin American stock indexes and currencies at 2054 GMT 
    
 Stock indexes                               daily %
                                              change
                                Latest    
 MSCI Emerging Markets           1057.05       -0.53
                                          
 MSCI LatAm                      2663.71       -1.55
 Brazil Bovespa                 94388.73       -0.65
 Mexico IPC                     43583.60       -1.21
 Chile IPSA                      5078.64       -0.89
                                          
 Argentina MerVal               32741.13       -0.75
 Colombia IGBC                  12433.60        -0.9
                                                    
 Currencies                                  daily %
                                              change
                                          
                                  Latest  
 Brazil real                      3.9674        0.03
                                          
 Mexico peso                     19.0279       -0.25
                                          
 Chile peso                        684.8       -0.95
 Colombia peso                   3298.65       -1.38
 Peru sol                          3.313       -0.15
                                          
 Argentina peso (interbank)      45.2400       -1.19
                                          
 
 (Reporting by Aaron Saldanha in Bengaluru; editing by Jonathan
Oatis)
  
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