EMERGING MARKETS-Latam currencies rally on weak U.S. services data
By Bruno Federowski SAO PAULO, Sept 6 (Reuters) - Latin American currencies rallied on Tuesday as weak U.S. services data reinforced doubts over the possibility of an interest rate hike this year. The pace of growth in the U.S. economy's service sector decreased by the most since the 2008 financial crisis in August from July, falling short of expectations in a Reuters poll of analysts. Concerns over the United States' economic health have been growing steadily since last week's tepid payrolls report caught investors by surprise. Bets that the Federal Reserve could increase interest rates in August fell following the release of the ISM report, while the odds of a December increase were about even, according to CME Group's FedWatch tool. Lower U.S. rates would benefit Latin American currencies, which typically lure investors with yields. However, stock markets in the region were mixed, weighed down by lower crude prices and concerns over possible spillovers stemming from weakness in the world's No. 1 economy. Brazil's benchmark Bovespa stock index was nearly flat as shares of state-controlled oil company Petróleo Brasileiro SA fell after hitting their highest in over a year on Monday. Losses were limited by a rise in shares of planemaker Embraer SA, the eighth in a row. Traders have been scooping up Embraer shares for days following a more than 50 percent slump so far this year. Shares of meatpacker JBS SA fell as much as 8.3 percent but later pared losses to trade 3.3 percent lower. Investors fear Chief Executive Wesley Batista could be forced to step down as part of an investigation over an investment of holding company J&F Investimentos in pulpmaker Eldorado Brasil SA. BTG Pactual analysts lowered their recommendation for the stock to "neutral" and reduced their price-target to 13 reais, from 10.85 reais currently. They cited concerns over a bumpy succession process, possible delays in the implementation of a corporate reorganization plan and higher leverage. Key Latin American stock indexes and currencies at 1550 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 924.76 1.67 14.54 MSCI LatAm 2474.94 1.18 33.68 Brazil Bovespa 59531.85 -0.06 37.33 Mexico IPC 47522.73 -0.67 10.58 Chile IPSA 4110.43 -0.48 11.69 Chile IGPA 20418.44 -0.38 12.49 Argentina MerVal 16076.94 0.44 37.70 Colombia IGBC 10280.01 -0.24 20.27 Venezuela IBC 11917.77 0.55 -18.31 Currencies daily % YTD % change change Latest Brazil real 3.2272 1.65 22.30 Mexico peso 18.3480 1.20 -6.09 Chile peso 663.6 1.46 6.95 Colombia peso 2884.02 1.77 9.89 Peru sol 3.372 0.74 1.25 Argentina peso (interbank) 14.9850 0.17 -13.36 Argentina peso (parallel) 15.32 0.39 -6.85 (Reporting by Bruno Federowski; Editing by Jonathan Oatis)
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