December 5, 2018 / 2:28 PM / 10 days ago

EMERGING MARKETS-Most LatAm currencies weaken, U.S. yields in focus

    By Agamoni Ghosh
    Dec 5 (Reuters) - A soft dollar did little to support Latin
American currencies in early trade on Wednesday as a flattening
of part of the U.S. Treasury yield curve fed investor worries
about slackening global growth, with a concrete resolution on
the U.S.-China trade war yet to be seen. 
    The greenback has enjoyed unrivaled performance against its
peers in recent months but an inverted yield curve - generally
seen as an indicator of a tepid growth - could undermine that
strength.
    The steady fall in yields comes not long after the U.S.
Federal Reserve suggested late last week that it may be nearing
an end to its three-year rate hike cycle.
    "It is a natural movement of exhaustion of the cycle of
monetary tightening, since the policy takes time to be passed on
to the economy," said Jason Vieira, chief economist at Infinity
Asset Management.
    Brazil's real slipped 0.3 percent. Consumer prices in
the country likely fell the most in more than a year in
November, a Reuters poll showed, suggesting the central bank
could refrain from raising borrowing costs for even longer than
expected.
    The Bovespa stock index also fell marginally as
energy stocks slid on lower oil prices.   
    State-controlled oil firm Petroleo Brasileiro SA
was one of the index's top losers after reports indicated
Brazilian anti-trust watchdog opened an investigation against
the company.
    Meatpacker JBS SA's 4.4 percent rise made it the
index's top gainer. The firm's newly appointed chief executive
said he would seek to boost profit margins.
    Chile's peso weakened 0.2 percent, after the central
bank left the benchmark interest rate unchanged on Tuesday,
although it anticipates it will be necessary to continue with a
gradual and cautious reduction of monetary stimulus.

     Mexico's peso bucked the trend, firming 0.2 percent.
Deputy Finance Minister Arturo Herrera said the government hopes
the repurchase of some bonds used to fund a partly-built airport
can be largely wrapped up by December 15.
    The scrapping of the project, which new President Andres
Manuel Lopez Obrador said was tainted by corruption, shook
investor sentiment towards Latin America's second largest
economy. 
    The Colombian peso was up for a fourth straight
session, while the central bank acquired $357 million from an
options auction.  

    Key Latin American stock indexes and currencies at GMT 1416
   
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets           1001.63     -1.24    -12.45
                                                    
 MSCI LatAm                      2594.30     -0.67     -7.65
                                                    
 Brazil Bovespa                 88584.72     -0.04     15.95
                                                    
 Mexico IPC                            -         -         -
                                                    
 Chile IPSA                      5152.80      0.07      0.07
                                                    
 Argentina MerVal                      -         -         -
                                                    
 Colombia IGBC                         -         -         -
                                                    
                                                            
 Currencies                                daily %     YTD %
                                            change    change
                                  Latest            
 Brazil real                      3.8708     -0.33    -14.40
                                                    
 Mexico peso                     20.4720      0.17     -3.78
                                                    
 Chile peso                        671.1     -0.12     -8.41
                                                    
 Colombia peso                    3160.1      0.45     -5.64
 Peru sol                          3.376      0.15     -4.12
                                                    
 Argentina peso (interbank)      37.8000     -1.06    -50.79
                                                    
 
 

 (Reporting by Agamoni Ghosh in Bengaluru; additional reporting
by Claudia Violante in Sao Paulo
Editing by Nick Zieminski)
  
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