July 2, 2019 / 7:55 PM / 3 months ago

EMERGING MARKETS-Most Latam stocks fall as U.S.-China trade optimism fades

 (Updates prices)
    By Susan Mathew
    July 2 (Reuters) - Most Latin American stocks fell on
Tuesday, tracking a pause in Wall Street's rally as optimism
around U.S.-China trade talks subsided, with worries about
economic growth and a drop in miner Vale additionally pressuring
Brazil shares.
    Following a risk-on day on spurred by the United States and
China agreeing to return to the negotiating table, most regional
shares lost between 0.1% and 1%.
    U.S. stocks lost momentum after as investors turned
skeptical about a U.S.-China trade deal after U.S. President
Donald Trump on Tuesday said any trade deal with China would
need to be "somewhat tilted" in favour of the United States.

    Washington's threats to impose tariffs on an additional $4
billion of goods from the European Union also weighed sentiment.

    Brazil shares slid 1% and the currency fell
0.2% against a weaker dollar on sluggish economic growth
outlook.
    Central bank chief Roberto Campos Neto said risks to
domestic growth from a global slowdown may be greater than
previously thought, and reiterated that economic recovery will
be gradual.
    Meanwhile, Brazil's industrial output data showed some
longer-term trends still point to an underperforming sector.
This followed a warning from the economy ministry on Monday that
trade activity will decline due to slowing global economic
growth. 
    "We remain sceptical about a sustained rebound in gross
fixed capital formation this year, as business confidence still
struggles and as key macro reforms move slowly in Congress,"
wrote Mauricio Oreng, senior Brazil strategist at Rabobank in a
note.
    "We only expected a U-turn in private capital spending for
2020," he wrote.
    Iron ore miner Vale's shares slumped 4.4% after a
Brazilian Senate committee investigating a deadly dam collapse
in January, said Vale's chief financial officer and its former
chief executive should both be indicted for manslaughter. 

    In Mexico, the peso firmed 0.3%, and decline on the
stock index were capped after Trump took tariffs against
Mexican imports off the table after the country stepped up
efforts to stem migrant flows from Central America to the United
States.
    Argentine assets outperformed, with shares up 0.9%,
while the peso extended gains a day after the central
bank set a new lower interest rate floor on its benchmark
"Leliq" notes for July, a rate it has been bringing down from
sky-high levels last year.
    "We think that the current move implies a more cautious
approach from policy-makers, in an effort to preserve ARS
stability," said Morgan Stanley analysts in a note.
    "The current environment benefits high yielders and we think
that ARS should stay supported."
           
    Key Latin American stock indexes and currencies at 1937 GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets         1063.59     -0.05
                                        
 MSCI LatAm                    2833.17     -1.18
                                        
 Brazil Bovespa              100505.51     -0.99
                                        
 Mexico IPC                   43385.36     -0.12
                                        
 Chile IPSA                    5033.64     -0.58
                                        
 Argentina MerVal             41898.39      0.94
                                        
 Colombia IGBC                12546.22     -0.48
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.8473     -0.12
                                        
 Mexico peso                   19.0616      0.28
                                        
 Chile peso                      680.3     -0.10
                                        
 Colombia peso                 3208.45     -0.22
 Peru sol                        3.294     -0.15
                                        
 Argentina peso                42.1500      0.52
 (interbank)                            
                                        
 

 (Reporting by Susan Mathew in Bengaluru; Editing by Lisa
Shumaker)
  
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