July 24, 2020 / 2:51 PM / 14 days ago

EMERGING MARKETS-Latam stocks slip on economic worries, worsening U.S.-China relations

    By Shreyashi Sanyal
    July 24 (Reuters) - Most Latin American stocks fell on
Friday, as economic worries exacerbated by the coronavirus
pandemic and worsening relations between the United States and
China kept investors away from riskier assets. 
    In a like-for-like move, China ordered the United States to
close its consulate in the city of Chengdu, responding to a U.S.
demand this week that China close its Houston consulate.

    "Risk appetite is running out of steam as virus worries
persist, and as it seems impossible to be constructive on China
or the U.S.," said Edward Moya, senior market analyst at OANDA. 
    The move reverberated through markets across the world, with
Wall Street also opening weaker and its losses spilling over to
regional equity indexes. Sao Paulo stocks slipped 0.7%,
while Mexican stocks fell 0.8%.      
    Brazil's real slipped against the dollar for the
second straight session as more bets for an interest rate cut
were spurred by mid-July inflation data that undershot the
consensus forecast. 
    Inflation in Brazil rose in July at its fastest pace in six
months thanks to rising transport and fuel costs, but at a far
slower rate than economists had expected.
    In Mexico, data showed its economy shrank another 2.6% in
May from April after a record decline the previous month,
dimming the chances of a sharp rebound in activity from the
destruction of the coronavirus pandemic.
    The Mexican peso made small gains against a weakening
dollar and as the oil exporter's currency was also supported by
higher crude prices. 
    "Although the economy will probably start to improve in the
second half of the year given the easing of restrictions in some
states, a slow and complex recovery is expected due to a severe
drop in investment spending," analysts wrote in a UBS client
    The Chilean peso rose as President Sebastian Pinera
on Thursday bowed to intense public pressure and agreed to sign
into law a controversial bill allowing citizens to draw down 10%
of their pensions early amid the coronavirus pandemic.

    Argentina's 1.7 trillion pesos ($23.7 billion) of short-term
'Leliq' notes have helped mop up liquidity in the market and
hold back rising prices, leaving the central bank with a tricky
task to rein in the debt without reigniting inflation.

    Bolivia's general election will be pushed back until Oct. 18
due to the coronavirus pandemic, which could fan tensions
between the interim conservative government and the socialist
party of former President Evo Morales.
    Key Latin American stock indexes and currencies;    
      Stock indexes               Latest      Daily %
 MSCI Emerging Markets              1058.87      -1.74
 MSCI LatAm                         2054.58      -0.63
 Brazil Bovespa                   102212.07      -0.69
 Mexico IPC                        37138.70      -0.79
 Chile IPSA                         3970.92      -0.34
 Argentina MerVal                  48237.78     -0.352
 Colombia COLCAP                    1175.54      -0.53
         Currencies               Latest      Daily %
 Brazil real                         5.2012      -0.23
 Mexico peso                        22.3990       0.40
 Chile peso                           765.3       0.63
 Colombia peso                       3686.1      -0.69
 Peru sol                            3.5327      -0.42
 Argentina peso (interbank)         71.8900      -0.07
 Argentina peso (parallel)              132       3.03

 (Reporting by Shreyashi Sanyal in Bengaluru)
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