November 6, 2019 / 3:07 PM / 9 days ago

EMERGING MARKETS-Brazil markets hit by oil auction results, broader Latam firm

    By Sruthi Shankar
    Nov 6 (Reuters) - Most Latin American currencies were
propped up by a soft dollar on Wednesday as investors awaited
developments in U.S.-China trade negotiations, although Brazil
markets were knocked lower  by results from a closely watched
auction of oil exploration blocs.
    After opening stronger against the dollar, the real
gave more than 1.2% after the state-owned oil firm Petrobras
 became the sole bidder for the block Itapu.

    The company's shares dropped 2.5% after gaining
about 3% earlier in the session. 
    A Petrobras consortium, including China's state-run
companies CNOOC and CNODC won the massive Buzios oil block,
again without any rival bids. The lack of competition
underscored the costly terms of the blockbuster oil round, which
had discouraged several major oil firms.
    Flavio Serrano, a senior economist at Haitong Bank said
investors had expected more participation from foreign firms and
 were disappointed with the auction results, with Petrobras
taking 90% of the Buzios consortium. 
    Executives from many of the world's biggest oil companies
gathered in Rio de Janeiro to compete in the long-awaited
transfer-of-rights (TOR) oil bidding round, the largest offer of
crude and gas reserves in the nation's history.
    If all the areas received a bid, Brazil's government could
have netted 106.5 billion reais ($26.7 billion) in signing
bonuses, offering breathing room for a tight federal budget and
cementing Brazil's ascendance as Latin America's oil powerhouse.
    The latest updates showed Sepia and Atapu oil blocks
received no bids. 
    The Bovespa fell 0.9% from its record high, with
shares in food processor JBS SA extending losses for
a second day after top prosecutor requested the annulment of
plea bargain deals previously signed with former executives of
the company.
    The country's largest airline, Gol Linhas Aereas
Inteligentes edged higher after reporting a 13% rise
in demand for its flights in October.
    Losses in the real also came after Brazil central bank chief
Roberto Campos Neto said the consolidation of benign inflation
expectations should allow the central bank to undertake another
interest rate cut of the same level as at its policy meeting in
October.
   On Oct. 30, the bank cut its benchmark interest rate to an
all-time low of 5%. 
    The Chilean peso gained 0.8%, while the Colombian
 and the Mexican pesos rose marginally as the
dollar wilted amid a lack of new developments in U.S.-China
trade talks.
    Global markets rallied on Tuesday after signs the United
States and China were working to narrow their differences enough
to sign a "phase one" trade deal as early as this month. Trade
hopes, tied to upbeat data from the United States, have eased
some fears of a global recession.
    
    Key Latin American stock indexes and currencies at 1421 GMT:
    
       Stock indexes                  Latest       Daily %
                                                    change
 MSCI Emerging Markets                  1068.14         -0.29
 MSCI LatAm                             2777.84         -1.44
 Brazil Bovespa                       107724.17         -0.92
 Mexico IPC                                0.00             0
 Chile IPSA                             4611.72          -2.5
 Argentina MerVal                      36901.81         0.086
 Colombia IGBC                         13567.12             0
                                                             
           Currencies                 Latest       Daily %
                                                    change
 Brazil real                             4.0414         -1.21
 Mexico peso                            19.2132         -0.07
                                                 
 Chile peso                                 741          1.04
 Colombia peso                          3303.94          0.09
 Peru sol                                3.3358          0.04
 Argentina peso (interbank)             59.6500          0.09
                                                 
 

 (Reporting by Sruthi Shankar in Bengaluru and Luana Maria
Benedito at Sao Paulo; Editing by Bernadette Baum)
  
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