May 6, 2019 / 9:05 PM / 18 days ago

EMERGING MARKETS-Latam assets shaken by U.S.-China trade tremors

 (Recasts, updates prices throughout; adds market analyst's
quote)
    By Aaron Saldanha
    May 6 (Reuters) - Latin American currencies slid against the
dollar on Monday, pressured by investors exiting riskier assets
for safer ground after U.S. President Donald Trump unexpectedly
threatened higher tariffs on Chinese goods over the weekend,
jolting investors. 
    Trump on Sunday said he would raise tariffs on $200 billion
worth of imports from China effective Friday and followed it up
on Monday with a lambasting of China over its trade practices.

    Stock markets in Latin America fell broadly, along with
global peers, not spared from the fall-out of heightened U.S.
trade tensions with China, a key buyer of resources such as
copper and iron ore from Latin America.
    MSCI's index of Latin American stocks was
1.1% lower, after hitting a five-and-a-half-week trough earlier
in the day.
    "It is difficult to say at this stage whether this move will
backfire by angering the Chinese side or whether it may spur
chances of a deal," Jakob Christensen, chief analyst and head of
EM research at Danske Bank, wrote in a note.
    Brazilian Economy Minister Paulo Guedes said the country's
economy will return to a sustainable growth path as soon as
pension reform is approved, following talks with President Jair
Bolsonaro.
    Investors see pension reform in Latin America's top economy
as key to Brazil trimming its yawning fiscal deficit. Bolsonaro
said that ideally the government budget would be met in full,
but revenues are falling.
    Brazil's real weakened 0.5%, while stocks
dropped 1%, weighed on by broad-based losses. Financials fell
especially heavily. 
    Banco Bradesco's preferred shares slid 2.7%. The
lender announced its first foray beyond Brazil's shores, buying
U.S.-based BAC Florida Bank            for about $500 million.  
    Shares of miner Vale SA slid 1.5%, following
weakness seen overnight in Chinese iron ore futures on Trump's
tariff threat.
    Mexican stocks slid 0.4%, while the peso
softened 0.3%.
    Chile's peso slipped 0.2%. Copper prices in Shanghai
 hit their lowest level since Jan. 29 during Monday's
session in China.  
    China is the world's biggest buyer of copper, which is
Chile's top export.
    Argentina was a rare bright spot of optimism across Latin
America. Stocks rose 1.8%, with energy firm YPF Sociedad
Anonima tacking on 2.4%, against the backdrop of
higher oil prices.
    The peso weakened against the firmer dollar, which
risk-averse investors snapped up on the day. 
    President Mauricio Macri is looking to strike an accord with
political rivals, including nemesis Cristina Fernandez de
Kirchner, aiming to calm volatile markets ahead of presidential
elections later this year.
    
    Latin American stock indexes and currencies at 2039 GMT
    
 Stock indexes                   Latest       Daily
                                                pct
                                             change
 MSCI Emerging Markets              1062.64   -1.86
                                             
 MSCI LatAm                         2705.77   -1.08
 Brazil Bovespa                    95008.66   -1.04
 Mexico IPC                        44116.70   -0.36
 Chile IPSA                         5124.88   -0.15
                                             
 Argentina MerVal                  33001.08    1.82
 Colombia IGBC                     12546.13   -0.22
                                                   
 Currencies                                   daily
                                                  %
                                     Latest  change
 Brazil real                         3.9594   -0.05
                                             
 Mexico peso                        18.9726   -0.30
                                             
 Chile peso                           678.3   -0.07
 Colombia peso                      3253.25   -0.55
 Peru sol                             3.308   -0.30
                                             
 Argentina peso (interbank)         44.6400   -0.31
                                             
 

 (Reporting by Aaron Saldanha in Bengaluru; Editing by Dan
Grebler)
  
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