* U.S. Fed cuts rates by 100 bps * Investors worry about Pemex downgrade as oil prices slide * Brazil unveils economic measures to support economy * UBS calls for immediate 100 bps cut by Brazil central bank By Susan Mathew March 16 (Reuters) - The Mexican peso sank as much as 5% on Monday, hitting new lows as oil prices tumbled, while Brazil's peso fell 2% as another emergency cut by the U.S. Federal Reserve did little to calm markets about the fast-spreading coronavirus. Regional stocks also slumped, in line with global markets. Brazil shares gave up as much as 14.3%, while those in Chile, Argentina and Colombia lost between 8.4% and 10.7%. The Fed cut interest rates by 100 basis points to near zero and pledged to expand its balance sheet by at least $700 billion in the coming weeks, joining a coordinated move by global central banks to combat the economic fallout from the deadly flu-like virus. "While rate cuts and quantitative easing may go some way to alleviate financial market stress, market participants are also looking for... other policy measures, including fiscal measures, to offset the... blow that the coronavirus pandemic has dealt," wrote Elena Duggar, an associate managing director at Moody's. As oil prices slid, with Brent falling 10%, and U.S. crude to below $30, Mexico's peso slipped to 23.05 to the dollar as investors worried about the impact of the oil slide on state oil firm Pemex. With a debt of more than $100 billion, Pemex is Latam's most indebted company and reported one of its worst-ever losses last year. After rating agency Fitch downgraded the company's bonds to junk last year, it faces the threat of similar action from S&P and Moody's which would spark an exodus from Pemex bonds by funds that are mandated to hold investment-grade bonds. Mexican stocks were shut for a local holiday. Brazil's real hovered near record lows. The government on Monday approved a raft of measures to combat the economic and financial damage from the virus, boosting liquidity in the financial system, maintaining the flow of credit in the economy and expanding banks' lending capacity. Economists at Swiss investment bank UBS on Monday called for an "immediate" 100 basis point cut in Brazil's benchmark Selic interest rate to 3.25%. A central bank survey showed the outlook for Brazil's economy deteriorated sharply. Sao Paulo's Bovespa index triggered a circuit break after it fell 10% and went on to steepen losses after it restarted. Carrier Azul tumbled 23% as it canceled all international flights. Smiles Fidelidade, carrier Gol's loyalty program, crashed 28% after Gol dropped its bid for Smiles. All eyes will now be on a Group of Seven teleconference underway to discuss the health crisis. Key Latin American stock indexes and currencies at 1435 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 835.81 -6.21 MSCI LatAm 1682.29 -10.83 Brazil Bovespa 74014.89 -10.48 Chile IPSA 3361.19 -10.69 Argentina MerVal 25532.12 -10.25 Colombia COLCAP 1075.21 -8.44 Currencies Latest Daily % change Brazil real 4.9382 -2.60 Mexico peso 22.6730 -3.40 Chile peso 850.5 -1.45 Colombia peso 4075.45 -1.34 Peru sol 3.52 -0.01 Argentina peso 63.0000 -0.16 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Dan Grebler)
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