May 23, 2019 / 3:01 PM / 4 months ago

EMERGING MARKETS-Latam assets slide on fears of worsening U.S.-China trade war

    By Aaron Saldanha
    May 23 (Reuters) - Latin American stocks and currencies slid
on Thursday, with fears of a worsening U.S.-China trade war in
focus as a stern warning China issued to the United States
prompted investors to dial back exposure to risky assets. 
    China said the United States needs to correct its "wrong
actions" so trade talks can continue. Globally, trade exposed
assets such as copper and oil lost ground, while
safe havens like Japan's yen were well
    "Trade wars are back on the wires, helping to fuel a
correction in risk markets," Mark McCormick, TD Securities'
North American head of FX strategy, wrote in a note, adding that
"the Chinese appear to be digging in their heels."
    Latin American markets are broadly exposed to commodities
and thereby benefit from solid global growth. They are
especially sensitive to a cooling Chinese economy as the country
buys a significant chunk of the Latin America's resources.

    MSCI's Latin American stocks index dived 
1.6%, retreating from a nine-day peak hit on Wednesday. MSCI's
Latin American currencies index shed 0.7%, on
course to end lower for the first time this week.
    Brazil's real weakened 0.4%, while Bovespa-listed
stocks dropped 0.8%, weighed on especially heavily by
energy stocks and financials.
    Common shares and preferred shares of
state-run oil firm Petroleo Brasileiro SA (Petrobras) fell
3.3%and 2.7% respectively, following a 3.9% slide in Brent crude
    Mexican stocks slid 0.7%, largely on losses among
materials stocks, while the peso softened 0.3%.

    Consumer price inflation in Latin America's second largest
economy was slightly lower than expected in the first half of
May, data showed.
    Chile's peso softened 0.4%, pressured by lower prices
of copper, the country's top export. Stocks slid
    Argentina's stocks fell 0.4%, while the country's
peso weakened to shed all gains made earlier this week.
    Colombia's peso weakened 1%, while stocks
fell 1.2%, with state-run oil company Ecopetrol down
    Pumping on the Bicentenario and Cano Limon oil pipelines has
been halted following bomb attacks in recent days, sources from
operators Bicentenario and Ecopetrol said on Wednesday.

    Latin American stock indexes and currencies at 1429 GMT  
 Stock indexes                              Daily % change
 MSCI Emerging Markets              984.19           -1.38
 MSCI LatAm                        2576.11           -1.59
 Brazil Bovespa                   93582.49           -0.82
 Mexico IPC                       42636.97           -0.71
 Chile IPSA                        4878.03           -0.87
 Argentina MerVal                 34436.36           -0.41
 Colombia IGBC                    12015.13           -1.24
 Currencies                                 daily % change
 Brazil real                        4.0549           -0.36
 Mexico peso                       19.0363           -0.26
 Chile peso                          699.5           -0.37
 Colombia peso                     3364.98           -0.93
 Peru sol                            3.352           -0.33
 Argentina peso (interbank)        45.1200           -0.53

 (Reporting by Aaron Saldanha in Bengaluru
Editing by Marguerita Choy)
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