August 11, 2017 / 4:32 PM / 11 days ago

EMERGING MARKETS-LatAm currencies firm slightly on U.S. data; geopolitics weigh

    By Bruno Federowski
    SAO PAULO, Aug 11 (Reuters) - Latin American currencies
inched up on Friday after data showing tepid U.S. inflation cast
further doubts over the prospect of another Federal Reserve
interest rate hike by year-end.
    Expectations of a slower path of policy tightening in the
United States fostered demand for higher-risk assets. But most
stock markets in the region were dragged downward by tensions
surrounding North Korea, which have driven sharp risk-aversion
over the past few days.
    The Brazilian real and the Mexican peso firmed 0.3
percent and 0.8 percent, respectively, tracking a worldwide
decline in the U.S. dollar after consumer prices edged up 0.1
percent in July, undershooting analyst expectations.

    The report could prompt Fed officials, who have largely seen
the recent ease in price hikes as temporary, to hold off on
policy tightening as they await further signs that inflation is
heading toward their 2 percent target.
    Still, investors said the upswing may not last long as
geopolitical uncertainty lingers.
    "We may as well see some profit-taking after the weekend,"
Mirae Asset head of operations Pablo Spyer said.
    The Chilean peso was flat after Fitch downgraded
the country's sovereign rating to 'A' from 'A+'.
    Stock markets in Mexico, Chile and
Colombia fell, extending recent losses on simmering
tensions between the United States and North Korea.
    U.S. President Donald Trump issued a new threat to North
Korea on Friday, saying what he called U.S. military solutions
were "locked and loaded" as Pyongyang accused him of driving the
Korean Peninsula to the brink of nuclear war.
    Still, Brazil's benchmark Bovespa stock index eked
out a gain of 0.35 percent, driven higher by corporate updates
from power utility Cia Paranaense de Energia SA and
for-profit college operator Kroton Educacional SA.
    Preferred shares in Copel, as the power utility is known,
led the gains after it called off plans to issue new stock that
would have diluted current shares. The announcement outshone an
85 percent drop in second-quarter net profit. 
    Kroton common shares posted their biggest daily
gain in two months after it posted forecast-beating net income
and operating profit in the second quarter. 
    
    Key Latin American stock indexes and currencies at 1720 GMT:
 Stock indexes                    Latest         Daily  YTD pct
                                                   pct   change
                                                change  
 MSCI Emerging Markets              1,041.90     -1.35    22.49
 Brazil Bovespa                    67,228.81      0.35    11.63
 Mexico S&P/BVM IPC                50,748.89     -0.31    11.19
 Chile IPSA                         5,028.97     -0.56    21.14
 Chile IGPA                        25,101.33     -0.51    21.06
 Argentina MerVal                  21,393.08      1.23    26.45
 Colombia IGBC                     10,786.73      -0.1     6.50
 Venezuela IBC                    182,728.92      -0.3   476.34
                                                               
 Currencies                           Latest     Daily  YTD pct
                                                   pct   change
                                                change  
 Brazil real                          3.1644      0.33     2.68
 Mexico peso                         17.8370      0.76    16.30
 Chile peso                           648.15      0.04     3.48
 Colombia peso                      2,978.24      0.70     0.78
 Peru sol                              3.248      0.09     5.11
 Argentina peso (interbank)          17.7250     -0.11   -10.44
                                                        
 Argentina peso (parallel)             18.47      0.05    -8.93
                                                        
 
 (Reporting by Bruno Federowski; additional reporting by Claudia
Violante, editing by G Crosse)
  

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