WRAPUP 1-LatAm markets fall on US financial jitters

By Walter Brandimarte

NEW YORK, March 17 (Reuters) - Latin American stocks, currencies and debt weakened on Monday as the fire sale of Bear Stearns and emergency actions by the U.S. Federal Reserve over the weekend highlighted the potential of crisis in the U.S. financial system, increasing aversion to risk globally.

Key Latin American stocks fell 3.8 percent according to the benchmark Morgan Stanley Capital International index for the region .MILA00000PUS, with investors wondering whether the Fed's actions, which included a quarter percentage point cut in its discount rate, will be enough to stem the credit crisis.

The MSCI Latin America index had lost all of its year-to-date gains on Friday, after Bear Stearns said nervous investors were getting their cash out the bank. With Monday's fall, the index now has suffered losses of over 4 percent since the beginning of 2008.

Trying to calm investors' nerves, the Fed backed the sale of Bear Stearns to JP Morgan Chase at $2 a share on Sunday. It also announced a new lending facility to primary dealers along with a quarter percentage point cut of its discount rate on the same day.

But investors were still upset.

"The Fed tried to inject confidence in the markets, but it ended up creating more uncertainty in the short term," said Kelly Trentin, an analyst with SLW brokerage in Sao Paulo.

"The concern right now is that the Fed might have seen something that the market is still not aware of," she added.

Brazil's Bovespa .BVSP and Argentina's MerVal stock indexes were leading losses in Latin America, both slipping more than 3 percent, while Mexico's IPC .MXX and Chile's blue-chip IPSA indexes .IPSA were about 2 percent lower.