EMERGING MARKETS-Latam stocks, currencies slip ahead of U.S. data
(Updates prices, adds fresh quote, Brazil rate futures) By Asher Levine SAO PAULO, April 3 (Reuters) - Latin American stocks and currencies closed lower on Thursday as investors took profits after recent rallies, with markets positioning for U.S. employment data due Friday. The MSCI Latin American stock index retreated about 1.2 percent after touching its highest level of the year in the previous session. Chilean, Brazilian and Mexican stocks all closed lower. Data on Thursday showed a larger-than-expected rise in U.S. jobless claims in the week ended March 29, though the underlying trend continued to point to some strength in the labor market. Investors remained focused on Friday's U.S. payrolls report, however, taking the opportunity to pocket recent gains in expectation of a stronger number. An encouraging number would help support the case for further tapering of the U.S. Federal Reserve's monetary stimulus program which has helped support Latin American currencies and stocks. "If that data comes out strong it's going to be risk-off in the context of a slightly more hawkish interpretation of tapering," said Siobhan Morden, head of Latin America strategy at Jefferies in New York. "So I assume it's probably just profit-taking after what had been some notable gains on foreign exchange over this past week and a half, ahead of nonfarm payrolls tomorrow." Brazilian interest rate futures fell across the board the day after Brazil's central bank raised its benchmark interest rate to 11 percent and signaled that it is ready to halt its tightening cycle if inflation subsides in coming weeks. Markets had priced in a higher likelihood for an additional 25 basis point hike at the next meeting, Morden added. Brazil's real slipped 0.5 percent, though it remains 3.4 percent stronger against the U.S. dollar this year. "The Brazilian real has been remarkably strong since late January, and the prospects of a sharp depreciation seem increasingly unlikely," wrote Oxford Economics economist Marcos Casarin on Thursday. "We believe that a stronger currency can do much more to tame inflationary pressures than another rate hike will." The Mexican peso weakened slightly, while the Chilean peso slipped 0.7 percent. Brazil's benchmark Bovespa stock market index fell 0.6 percent and dropped back into slightly negative territory for the year. Brazil's market had rallied in recent sessions, driven by an increase in global risk appetite and a recent poll showing a decline in the approval rating of President Dilma Rousseff's government. Many investors have been critical of the current government for what they say has been its heavy-handed meddling in the private sector and for policies that run against the interests of minority shareholders in state-controlled companies, shares of which soared after the poll. Investors took profits on those gains on Thursday, with shares of state-run Petroleo Brasileiro SA, known as Petrobras, down 1.0 percent, and lender Banco do Brasil SA falling 1.6 percent. Elsewhere in Latin America, Mexico's IPC stock index capped a five-session rally, retreating from an over 8-month high reached in the previous session. Chile's IPSA index posted its biggest drop in nearly two weeks, driven by a 1.2 percent decline in shares of regional energy group Endesa Key Latin American stock indexes and currencies at 2112 GMT: Stock Latest daily % YTD % indexes change change MSCI Emerging Markets 1000.17 -0.48 -0.25 MSCI LatAm 3202.18 -1.22 0.04 Brazil Bovespa 51408.21 -0.57 -0.19 Mexico IPC 40563.06 -0.83 -5.06 Chile IPSA 3793.64 -0.43 2.55 Chile IGPA 18628.12 -0.42 2.20 Argentina MerVal 6498.24 0.89 20.54 Colombia IGBC 14076.1 0.22 7.69 Peru IGRA 14282.55 -0.11 -9.34 Venezuela IBC 2523.19 0 -7.80 Currencies Latest daily % YTD % change change Brazil real 2.2788 0.5 3.42 Mexico peso 13.1152 0.04 -0.65 Chile peso 557.1 -0.68 -5.56 Colombia peso 1967.4 0.00 -1.80 Peru sol 2.808 0.00 -0.53 Argentina peso 8.0000 0.03 -18.84 (interbank) Argentina peso 10.65 1.69 -6.10 (parallel) (Editing by Clive McKeef)
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