June 8, 2018 / 3:40 PM / a year ago

EMERGING MARKETS-Brazil equities slide, cenbank props up currency

    SAO PAULO, June 8 (Reuters) - Brazilian equities extended
their recent slide amid political and fiscal worries on Friday,
while the country's currency reversed losses as the central bank
pledged liquidity to help prop up the real.
    Stocks on the benchmark Bovespa stock index tumbled
across the board for a fourth straight session, as traders
continued to fret ahead of an unpredictable October election in
which market-friendly candidates have failed to gain traction,
according to recent polls.
    Recent government intervention in oil company Petroleo
Brasileiro SA has also caused traders to question the
resolve of the current government - and the ability of the next
one - to stay on a path of pro-market policies and relative
fiscal austerity.
    "It's still an uncertain scenario, without a positive
conclusion coming to light for local financial markets," said a
Rio de Janeiro-based trader.
    The Bovespa index was down 1.7 percent in late morning
trade, after falling almost 3 percent earlier in the session.
    Among the biggest losers on the index was food processor BRF
SA, which shed some 5.4 percent, after China said it
was slapping anti-dumping measures on Brazilian chicken.

    Shares in state-run electricity company Centrais Eletricas
Brasileiras SA, commonly known as Eletrobras, fell
5.3 percent amid ongoing setbacks to a privatization program
that now seems almost certain to be left to the next government.
    Preferred shares in Petrobras were down 4 percent after
analysts at UBS downgraded the state-controlled oil company to
"neutral" from "buy," saying the "phoenix ... (had fallen) back
down to the earth."
    Brazil's currency, however, jumped 3.4 percent on
Friday, rebounding from losses of up to 3 percent on Thursday
and 19 percent since February. 
    The currency was supported by multiple statements from
Brazilian central bank chief Ilan Goldfajn on Thursday and
Friday, saying that the bank would offer up to $20 billion in
currency swaps and ensure liquidity in the currency and interest
rate markets.
    In neighboring Argentina, the peso fell sharply
against the dollar after the country signed a $50 billion
standby financing arrangement with the International Monetary
Fund, causing the central bank to abandon its spirited defense
of the currency.
    "I think (the) USD/ARS upward trend should remain intact,"
said Win Thin, Global Head of Emerging Market Currency Strategy
at Brown Brothers Harriman in New York.
    "Once the IMF deal was reached in principle, I'm sure that
Argentina was asked to take FX intervention off the table. Last
thing the IMF wants to see is its program money burned away by
FX intervention, and so the peso needs to find its equilibrium
level somewhere north of 25."
    The Argentine peso was down 2 percent at 25.5 per dollar in
midday trade while the Mexican peso was down 0.4 percent at
20.56 per dollar.
Key Latin American stock indexes and currencies at 1454 GMT:  
 Stock indexes             Latest          Daily   YTD pct
                                             pct    change
 MSCI Emerging Markets        1,133.26     -1.43     -0.76
 MSCI LatAm                   2,452.36      0.12    -13.39
 Brazil Bovespa              72,627.80     -1.66     -4.94
 Mexico IPC                  45,457.48     -0.04     -7.90
 Chile IPSA                   5,457.46     -0.19     -1.93
 Chile IGPA                  27,646.18     -0.08     -1.20
 Argentina MerVal            30,852.93      2.24      2.62
 Colombia IGBC               12,251.93     -0.09      7.75
 Venezuela IBC               40,372.64      1.28  3,096.21
 Currencies                     Latest     Daily   YTD pct
                                             pct    change
 Brazil real                    3.7933      3.42    -12.65
 Mexico peso                   20.5645     -0.39     -4.21
 Chile peso                      630.8     -0.02     -2.56
 Colombia peso                 2,852.3     -0.18      4.55
 Peru sol                        3.264     -0.03     -0.83
 Argentina peso                25.5000     -2.02    -27.06
 Argentina peso                  25.65     -0.39    -25.03
 (Reporting by Gram Slattery; additional reporting by Paula
Arend Laier in Sao Paulo and Rodrigo Campos in New York, editing
by G Crosse)
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