November 18, 2019 / 3:26 PM / 17 days ago

EMERGING MARKETS-Latam FX pares gains on uncertainty around U.S.-China trade

    * China "pessimistic" about U.S. trade deal -CNBC
    * Chile peso falls after zooming on Friday
    * Brazil real firms, Mexican peso eases

    By Sagarika Jaisinghani and Shreyashi   Sanyal
    Nov 18 (Reuters) - Latin American currencies firmed on
Monday on hopes of a Sino-U.S. trade deal but pared some gains
after a report that the mood in China was "pessimistic" about an
impending resolution to the dispute.
    An index of Latin American currencies rose
as much as 0.4% to a one-week high after Chinese state media
said over the weekend that two sides had held "constructive"
trade talks. 
    But CNBC reported on Monday that the mood in Beijing was
"pessimistic" because of U.S. President Donald Trump's
reluctance to roll back tariffs.
    "We saw the same dynamics in May where the two sides got
really close and then the talks completely broke down, but right
now the stakes are too high, especially for the U.S.," said Win
Thin, global head of emerging market currency strategy at Brown
Brothers Harriman in New York.
    The report also tempered stocks globally,
which were earlier lifted by an unexpected decision by China's
central bank to trim a key interest rate for the first time
since 2015, a signal to markets that it was prepared to step in
to prop up an ailing economy.
    Latin American currencies were mixed, with the Brazilian
real up about 0.3%, but the Mexican peso and
Colombian peso easing 0.3% and 0.7%, respectively,
against a slightly weaker dollar.
    Brazilian interest rates are expected to be cut to a new low
of 4.25% by the end of next year, according to a central bank
survey of economists, which also showed inflation drifting
further below the monetary authority's target.
    The Chilean peso fell slightly after firming nearly
4% in the previous session as lawmakers agreed to hold a
referendum to overhaul the country's dictatorship-era
constitution.
    The currency had tumbled to a record low of 807.60 to the
dollar last week following a month of anti-government protests
that have left more than 20 dead and wreaked billions in damages
to public and private infrastructure.
    "There were worries about where these protests were going
and this a constitution from 1980, so you could say it is due
for an update, but there is still uncertainty about what the
change will entail," Thin said.
    Brazil stocks rose about 0.4%, led by a 5% gain for
protein producer Marfrig Global Foods SA, which said
it had raised its stake in U.S. meatpacker National Beef Packing
Co to 81.7% from 51%.
    Financial markets in Mexico and Argentina were closed
because of a local holiday.
    
    Key Latin American stock indexes and currencies at 1458 GMT:
   
     Stock indexes              Latest    Daily % change
 MSCI Emerging Markets           1052.12            0.32
                                          
 MSCI LatAm                      2693.14            0.13
                                          
 Brazil Bovespa                106941.11            0.36
                                          
 Mexico IPC                            -               -
                                          
 Chile SPIPSA                    4786.32           -1.55
                                          
 Argentina MerVal                      -               -
                                          
 Colombia IGBC                         -               -
                                          
                                                        
        Currencies              Latest    Daily % change
 Brazil real                      4.1835            0.22
                                          
 Mexico peso                     19.2421           -0.34
                                          
 Chile peso                        775.9            0.13
                                          
 Colombia peso                      3449           -0.74
 Peru sol                         3.3678           -0.14
                                          
 Argentina peso (interbank)            -               -
                                          
 
 (Reporting by Sagarika Jaisinghani and Shreyashi Sanyal in
Bengaluru; Editing by Steve Orlofsky)
  
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