October 14, 2019 / 8:04 PM / 8 months ago

EMERGING MARKETS-Brazil's real lags the most as trade optimism wanes

 (Updates market prices)
    By Sruthi Shankar
    Oct 14 (Reuters) - Brazil's real led declines among Latin
American currencies on Monday as optimism over a partial
U.S.-China trade agreement faded with investors looking for more
clarity on a resolution.
    The real fell 0.7% to the 4.1262 per dollar level, on
track for its biggest percentage decline in a week, while the
Chilean peso and the Peruvian sol also edged
    Late on Friday, Washington and Beijing outlined the first
stage of a trade deal and suspended this week's scheduled U.S.
tariff hikes on Chinese goods, sparking a rally in risk assets
including emerging market currencies and stocks.
    But existing tariffs remain in place and officials from both
sides said much more work was needed before an accord could be
agreed. Bloomberg reported on Monday that China wants more talks
to hammer out the details, including scrapping the planned
tariffs in December, before it signs the partial deal.

    Weak trade data out of China, a key destination for
commodity exports from Latin America, also caused concern.

    "While the bar had been set very low, we consider the
tentative U.S.-China mini deal as insufficient to lift market
sentiment meaningfully as a lot of uncertainty persists," ING
analysts wrote in a note.
    "...there is no tangible progress with regard to the issues
of intellectual property/technology transfers and all tariff
hikes remain in place."
    Chile's peso fell 0.25%, breaking a three-session winning
streak, with added pressure coming from declining prices of its
main export, copper.
    Bucking the trend, Mexico's peso rose 0.2% and looked
set to extend gains to a fourth day despite ratings agency
Moody's cutting forecasts for the country's gross domestic
product (GDP) growth for 2019 and 2020.
    In Ecuador, President Lenin Moreno said on Monday he would
repeal a decree that slashed fuel subsidies "in coming hours,"
confirming that he had given into a key demand of protesters who
had spent nearly two weeks agitating against it.
    Ecuador's bonds had slumped to multi-month lows last week in
the wake of violent demonstrations after Moreno cut fuel
subsidies as part of a package of measures in line with a $4.2
billion International Monetary Fund loan.
    Latin American equities were steady, moving
in line with Wall Street.
    In Brazil, stocks reversed early losses and were
trading about 0.3% higher, helped by banking shares.
    A 1.4% fall in miner Vale after it reported a 17%
decline in iron ore production from a year ago, capped gains on
Brazil's main index.
    Markets in Argentina and Colombia were closed for public
    Key Latin American stock indexes and currencies at 1921 GMT:
        Stock indexes                  Latest       Daily %
 MSCI Emerging Markets                    1017.34        0.57
 MSCI LatAm                               2702.56           0
 Brazil Bovespa                         104173.71        0.33
 Mexico IPC                              43265.71        0.12
 Chile IPSA                               5131.69        -0.1
 Argentina MerVal                               -           -
 Colombia IGBC                                  -           -
           Currencies                  Latest       Daily %
 Brazil real                               4.1262       -0.76
 Mexico peso                              19.2746        0.22
 Chile peso                                 712.2       -0.25
 Colombia peso                                  -           -
 Peru sol                                   3.367       -0.36
 Argentina peso (interbank)                     -           -
 (Reporting by Sruthi Shankar in Bengaluru; Editing by Andrea
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