October 15, 2019 / 8:46 PM / in 4 months

EMERGING MARKETS-Brazilian real touches 2-week low as trade doubts remain

 (Updates with market price)
    By Sruthi Shankar
    Oct 15 (Reuters) - Brazil's real touched a near two-week low
against the dollar on Tuesday and most Latin American currencies
weakened as doubts prevailed over a partial U.S.-China trade
agreement, while the IMF lowered its economic growth outlook for
Latin America.
    The real fell 0.9% in its third straight session of
declines, leading losses among the regional currencies, while
the Colombian and the Chilean pesos dropped 0.7%
and 0.4%, respectively.
    Investors were unsettled about the recent trade negotiations
between Washington and Beijing officials as China indicated that
further talks were needed and a top U.S. official said
additional tariffs will be imposed in December if a deal has not
been reached by then.
    "Sentiment continues to deteriorate amid trade war
concerns," strategists at Bank of America Merrill Lynch wrote in
a note. 
    "In the long run, investors are positive on Brazil. Still,
catalysts look priced in, as most expect further Selic cuts and
tax reform approval in 2020."
    A recent string of weak data out of Brazil had raised
concerns about its economic recovery and added to bets that the
central bank will bring down interest rates further.
    Adding to woes, the International Monetary Fund lowered its
economic growth estimates for Latin America, citing U.S.-China
trade war and other local factors.
    Mexico's peso traded slightly higher, on track for
its fifth session of gains. 
    Mexico's federal government is trying to counter an economic
slowdown with targeted infrastructure spending, Finance Minister
 Arturo Herrera said, adding that a tax reform could be expected
in the second half of President Andres Manuel Lopez Obrador's
    Analysts at Citigroup say the Mexican and Chilean pesos have
benefited from hedge fund buying over the last few weeks. They
added that a study of leveraged flows shows the Mexican currency
is the most attractive Latam currency.
    Stocks in the region were steady. 
    In Brazil, a 1% rise in shares of state-owned oil firm
Petrobras was countered by a 5.2% loss in power firm
Equatorial Energia SA after a regulator denied
requests to raise tariffs in certain states. 
    Key Latin American stock indexes and currencies at 2004 GMT:
        Stock indexes                  Latest       Daily %
 MSCI Emerging Markets                    1019.07        0.16
 MSCI LatAm                               2691.64        -0.5
 Brazil Bovespa                         104510.68         0.2
 Mexico IPC                              43262.23       -0.09
 Chile IPSA                               5157.50        0.51
 Argentina MerVal                        31344.75      -1.426
 Colombia IGBC                           12904.25       -0.34
           Currencies                  Latest       Daily %
 Brazil real                               4.1653       -0.94
 Mexico peso                              19.2520        0.08
 Chile peso                                715.05       -0.40
 Colombia peso                               3450       -0.70
 Peru sol                                   3.366        0.03
 Argentina peso (interbank)               58.2700       -0.38
 (Reporting by Sruthi Shankar and Susan Mathew in Bengaluru;
Editing by Cynthia Osterman)
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