May 9, 2019 / 9:22 PM / 4 months ago

EMERGING MARKETS-Latam assets subdued amid U.S.-China trade fears

 (Recasts throughout; updates prices, adds strategist quote)
    By Aaron Saldanha
    May 9 (Reuters) - A benchmark Latin American stock index
fell on Thursday, while most Latin American currencies softened
against the dollar, with investors shifting to safer assets as
they awaited new developments in the U.S.-China trade war.
    Increased U.S. tariffs on $200 billion worth of Chinese
goods are due to kick in on Friday. Trade talks in Washington
featuring Chinese Vice Premier Liu He started on Thursday.

    MSCI's Latin American stocks benchmark slid
1.7%, while its Latin American currencies index
fell 0.9%.
    "It seems difficult for the trade talks to avoid a hike in
tariffs ... We would expect a further repricing of risk assets,
including EMFX," Dirk Willer, head of emerging market strategy
at Citi Research, and Kenneth Lam, an emerging markets FX
strategist, wrote in a note.
    Brazilian equities dropped 0.8%, with financials and
energy stocks weighing especially heavily.
    Common shares and preferred shares of
Petroleo Brasileiro SA (Petrobras) fell 2.9% and 2%,
respectively.
    Petrobras, which announced lukewarm results on Wednesday, is
expected to launch a secondary share offering on May 24, a
source said on Thursday.
    Retailer Grupo Pao de Acucar tumbled 4.3% on news
of its parent, Paris-listed Casino Guichard Perrachon SA
, reviewing strategic options in Latin America.

    Brazil's real weakened 0.5%. The country's central
bank left its key rate at 6.5% on Wednesday, as expected, but
its outlook was seen by economists as slightly more dovish.
  
    Mexican stocks fell 0.5%, lower for a thirteenth
straight session in their longest losing streak in more than
three decades, while the peso softened 0.8%.
    President Andres Manuel Lopez Obrador said state oil firm
Pemex will oversee a new refinery construction, raising fears
about the company's financial health.
    Data earlier in the day showed Mexican inflation accelerated
to a four-month high in April, restricting the central bank's
room to trim interest rates to spur the economy.
    Argentina's stocks rose 1%, while the peso
softened.
    
    Latin American stock indexes and currencies at 2100 GMT
 Stock indexes               Latest         Daily %
                                             change
 MSCI Emerging Markets         1,028.40       -2.14
                                         
 MSCI LatAm                    2,656.11       -1.72
                                         
 Brazil Bovespa               94,807.85       -0.83
                                         
 Mexico IPC                   43,193.36        -0.5
                                         
 Chile IPSA                    5,045.54        -0.3
                                         
 Argentina MerVal             34,119.10        1.02
                                         
 Colombia IGBC                12,576.16        0.37
                                         
                                                   
 Currencies                                 daily %
                                             change
                                 Latest  
 Brazil real                     3.9474        0.13
                                         
 Mexico peso                    19.2276       -0.76
                                         
 Chile peso                       684.5       -0.04
                                         
 Colombia peso                  3,274.4        0.52
 Peru sol                         3.313        0.09
                                         
 Argentina peso (interbank)     45.2000       -0.11
                                         
 

 (Reporting by Aaron Saldanha in Bengaluru, Editing by Rosalba
O'Brien)
  
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