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EMERGING MARKETS-Latam stocks fall on US default fears; TIM soars
October 9, 2013 / 5:26 PM / in 4 years

EMERGING MARKETS-Latam stocks fall on US default fears; TIM soars

SAO PAULO, Oct 9 (Reuters) - Key Latin American stock
indexes dropped on Wednesday on fears of a U.S. debt default,
but shares of Brazil's TIM Participações soared on a
report that Telecom Italia was seeking to sell its
controlling stake in the Brazilian company by at least $12
    Brazil's second-largest wireless phone company saw its
shares jump as much as 10 percent to 11.99 reais, their highest
since late 2006, after Bloomberg reported that Telecom Italia is
seeking a 50 percent premium over TIM's current market value to
sell its 67 percent stake in the Brazilian company.
    Latin American stocks were initially boosted by news that
U.S. President Barack Obama will nominate Janet Yellen to run
the Federal Reserve. Obama's choice brought relief to investors
who expect Yellen to be extra careful when winding down a
monetary stimulus plan that has supported investors' appetite
for risk in emerging markets.
    The benchmark MSCI stock index for Latin America
 edged slightly higher early in the session but
later erased gains to drop 0.7 percent as concerns about the
U.S. debt ceiling sapped market optimism.
    The U.S. Treasury is expected to exhaust its borrowing
capacity by Oct. 17, when it will have only about $30 billion
left in cash to honor its obligations. While many investors
expect U.S. lawmakers to reach a last-minute agreement to lift
the country's debt ceiling, others preferred to be on the
sidelines while the U.S. political scenario remains unclear.
    "On one hand, Yellen's nomination favors gains in stock
markets as it reiterates (bets on) monetary stimulus," said
Andre Perfeito, an economist with Gradual Investimentos in Sao
Paulo. "On the other hand, the United States seems to have
reached a relevant fiscal impasse, which is leaving markets
    Concerns about an eventual tapering of the Fed's stimulus
program, coupled with weak economic growth in Brazil, are
expected to drive the Bovespa index to close 2013 at its lowest
level since the 2008 financial crisis, a Reuters poll showed on
    Latin America's key stock indexes at 1702 GMT:
 Stock indexes                        daily %    YTD %
                         Latest        change   change
 MSCI LatAm                 3,306.94    -0.71    -12.3
 Brazil Bovespa            52,032.16    -0.54   -14.63
 Mexico IPC                39,778.48    -0.35    -8.99
 Chile IPSA                 3,780.70    -0.76   -12.10
 Chile IGPA                18,647.23    -0.62   -11.50
 Argentina MerVal           4,911.95    -0.27    72.09
 Colombia IGBC             14,087.99    -0.33    -4.27
 Peru IGRA                 15,444.77    -0.69   -25.13
 Venezuela IBC          1,768,297.13      1.7   275.09

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