EMERGING MARKETS-U.S. data boosts risk appetite; Russian assets fall
(Recasts; adds late market action in Latin America; changes dateline) By Walter Brandimarte and Carolyn Cohn RIO DE JANEIRO/LONDON, March 6 (Reuters) - Emerging market currencies and stocks traded mostly higher on Thursday after upbeat U.S. labor market data, but Ukrainian and Russian assets fell after Crimea's parliament voted to join Russia, triggering potential U.S. sanctions. MSCI's benchmark index of emerging market stocks gained 1.1 percent while the Latin American portion of the index jumped nearly 2 percent after data showed weekly applications for U.S. unemployment benefits fell to their lowest in three months. "Markets continued in risk-on mode," BullTick Capital Markets said in a research note, adding that the U.S. jobless claims data possibly increased "hopes for a positive rather than negative surprise in tomorrow's non-farm number." U.S. nonfarm payrolls are forecast to have increased by 149,000 jobs in February, according to the latest Reuters survey of economists. The data has great potential impact on emerging markets as it may determine the pace of withdrawal of U.S. central bank's monetary stimulus. Key emerging market currencies also strengthened during New York trading hours, with the Turkish lira jumping 1 percent, the Mexican peso climbing 0.6 percent and the Chilean peso gaining 0.7 percent. Russia and Ukraine assets took a hit, however, after Crimea's Moscow-backed government said a referendum on the region's status would take place on March 16, in a dramatic escalation of the crisis over the Ukrainian Black Sea peninsula. European Union leaders are holding an emergency summit on Thursday to seek ways to pressure Russia to back down and accept mediation. "Markets are still very sensitive to Russia/Ukraine-related headlines," said Luis Costa, emerging markets strategist at Citi, in a client note. "It looks pretty clear to me the referendum's outcome will be a glaring 'yes' to join Russia." An executive order from President Barack Obama allows the United States to sanction those most directly involved in destabilizing Ukraine, including Crimea, the White House said. Ratings agency Moody's Investors Service said the Russia-Ukraine situation was credit-negative for Russia and the possibility of sanctions could damage exports and growth. "Any secondary effect (on Russia) of the escalation in tensions will be financial," said Joseph Dayan, managing director of brokerage BCS Financial Group. "Sanctions are the key concern." Ukraine and state energy firm Naftogaz' dollar bonds due later this year fell sharply after the country's finance minister said on Wednesday that Ukraine could start talks with creditors on restructuring foreign currency debt. But a Ukraine Finance Ministry official told bankers on Thursday that the government intended to honor its foreign and domestic debt obligations. Russian stocks fell about 1 percent and the ruble weakened 0.3 percent against the dollar. Key Latin American stock indexes and currencies at 2054 GMT: Stock indexes Latest Daily pct YTD pct change change MSCI Emerging 969.69 1.1 -4.34 Markets MSCI LatAm 2,975.9 1.72 -8.6 Brazil Bovespa 47,093.13 1.08 -8.57 Mexico IPC 39,179.34 0.41 -8.30 Chile IPSA 3,730.39 0.39 0.84 Chile IGPA 18,399.37 0.33 0.95 Argentina MerVal 5,909 2.76 9.61 Colombia IGBC 12,915.99 1.43 -1.19 Peru IGRA 15,299.38 0.76 -2.88 Venezuela IBC 2,767.95 0.88 1.15 Currencies Daily pct YTD pct change change Latest Brazil real 2.3200 -0.06 1.59 Mexico peso 13.1563 0.60 -0.96 Chile peso 558.5 0.73 -5.80 Colombia peso 2,028.38 0.52 -4.75 Peru sol 2.805 0.00 -0.43 Argentina peso 7.8700 0.16 -17.50 (interbank) Argentina peso 10.95 -3.65 -8.68 (parallel) <-------------------------------------------------------------- GRAPHIC on emerging market FX performance 2014: link.reuters.com/jus35t GRAPHIC on MSCI emerging index performance 2014: link.reuters.com/weh36s GRAPHIC on MSCI emerging Europe performance 2014: link.reuters.com/jun28s GRAPHIC on MSCI frontier index performance 2014: link.reuters.com/zyh97s CENTRAL EUROPE market report: TURKISH market report: RUSSIAN market report: --------------------------------------------------------------> (Additional reporting by Natsuko Waki in London; editing by G Crosse)
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