EMERGING MARKETS-Latam stocks fall on 'fiscal cliff' vertigo

Fri Nov 9, 2012 5:18am IST

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* "Fiscal cliff," China, Europe weigh
    * Markets remain low after Obama victory
    * Brazil Bovespa falls 1.7 pct, Mexico IPC down 0.44 pct

    By Danielle Assalve and Gabriel Stargardter
    SAO PAULO/MEXICO CITY, Nov 8 (Reuters) - Latin American
stocks fell on Thursday as the specter of the United States'
so-called "fiscal cliff" continued to spook investors, and the
European Central Bank president said there was little chance of
quick improvement in the euro zone economy. 
    The MSCI Latin American stock index fell by
more than 1 percent for the second session in a row, losing 1.04
percent to 3,618.69. 
    Commodities producers drove down Brazil's Bovespa,
which faced its second day of punishing losses, following U.S.
President Barack Obama's re-election on Tuesday night. The index
has now fallen 2.5 percent since the close of trading on Monday.
    Obama will have to broker a cross-party response to avert a
package of tax hikes and spending cuts, known as the fiscal
cliff, planned for the new year that could send the country into
into recession. 
    "The predominant trend seems to be risk aversion," said
Eduardo Velho, chief economist at Planner Investimentos in Sao
Paolo. "Nobody knows what will happen with the United States and
that will leave the markets pretty cautious going forward." 
    Unanswered questions about the faltering euro zone economy
also weighed and ECB President Mario Draghi's announcement
appeared to open the door to an interest rate cut in the months
ahead. The issue of whether or not Spain will ask for economic
aid also remains unresolved. 
    Earlier in the day, Mexico's IPC index fell to a
six-week low, before recovering, ending the day down 0.44
percent at 40,830.65, as telecommunications giant America Movil
 and mining company Grupo Mexico weighed.
    The losses capped a dramatic one-day turnaround, with early
trading buoyed by promising unemployment data from the United
States and news that Greece's parliament had approved a testing
austerity package. ; 
    Attention then turned to China where a leadership handover
could result in new economic policy in the world's second
largest economy and one of the region's top trading partners.
China is a key purchaser of Latin American commodities exports
such as iron-ore, soy, copper and petroleum.
    "The key issue is whether the next leadership will pursue
reforms to rebalance the economy towards consumption and away
from investment," said Neil Shearing, chief emerging markets
economist with Capital Economics in London. "Investment is very
commodity-intensive and that's what really spurred Brazilian
exports to China."
    Brazil's benchmark Bovespa stock index fell 1.7
percent to 57,524.45, and has lost more than 7 percent since the
highs of mid-September. 
    Oil producer Petrobras fell 2.69 percent after 
the country's petroleum regulator, the ANP, said on Thursday
that Brazil's oil and natural gas output fell for the third
straight month in September, slicing Brazilian production to its
lowest level in nearly three years. 
    Preferred shares in iron ore producer Vale slid
2.04 percent, while shares in the Banco do Brasil SA 
fell 4.45 percent after the state-controlled bank said it did
not expect expenses for bad loans to fall until next year, after
credit-related losses thwacked third-quarter earnings at
Brazil's biggest lender. 
    Telecommunications firm America Movil, down 1.31
percent, dragged on Mexico's IPC index. The index broke below
its 100-day moving average in the previous session and some
traders are eyeing a further drop of about 3 percent to its
200-day average.
    Analysts also said the United States' fiscal cliff would
become an increasing burden on the IPC.
    "They have talking about the fiscal cliff all year, but now
that the elections are over everyone's paying attention," said
Gerardo Roman, head of stock trading at brokerage Actinver in
Mexico City. 
    Chile's IPSA index lost 0.15 percent to 4,249.92.
    
    Latin America's key stock indexes at 2237 GMT: 
    
 Stock indexes                                         % change
                              Latest              
                                                               
 MSCI LatAm                          3,618.69             -1.04
                                                  
 Brazil Bovespa                     57,524.45              -1.7
                                                  
 Mexico IPC                         40,830.65             -0.44
                                                  
 Chile IPSA                          4,249.92             -0.15
                                                  
 Chile IGPA                         20,778.20             -0.47
                                                  
 Argentina MerVal                    2,401.84              1.33
                                                  
 Colombia IGBC                      14,311.99              2.45
                                                  
 Peru IGRA                          21,115.06              1.09
                                                  
 Venezuela IBC                     363,575.72                 0
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