EMERGING MARKETS-Latam markets sink as Ukraine, China fuel investor jitters
By Asher Levine SAO PAULO, April 15 (Reuters) - Latin American stocks and currencies dropped on Tuesday, with investor concerns over escalating tensions in Ukraine and potentially weaker growth in key trade partner China sapping enthusiasm for local assets. The MSCI Latin American stock index posted its biggest one-day drop in nearly eight months, while nearly every currency in the region weakened against the U.S. dollar. Demand for riskier investments fell across the globe after Ukraine said an "anti-terrorist operation" against pro-Moscow separatists was underway and Russia declared Ukraine on the brink of civil war. The mood was darkened further after data on Tuesday showed China's money supply grew at the weakest pace in more than a decade in March. The numbers are a sign of softening economic momentum in Brazil's top trading partner, a key purchaser of Latin American raw materials such as iron-ore, soybeans and copper. Brazil's Bovespa stock index posted its biggest intraday loss in over ten weeks, as shares of commodities firms such as iron-ore exporter Vale SA, which counts China as its biggest customer, sank. Other widely-traded stocks that tend to attract foreign investors, such as state-run oil firm Petroleo Brasileiro SA, known as Petrobras, and lender Itau Unibanco Holding SA, also fell sharply. Brazilian stocks caught the attention of global investors last month following a two-week, 15 percent rally fueled by rising risk appetite and heightened expectations for a change in economic policy following October's presidential election. "A lot of (the rally) had to do with short squeezes, people unwinding bets against emerging markets," said Carlos Nielebock, a trader with ICAP Corretora in Sao Paulo. "That trend is done. We need some new inspiration. Bad news keeps coming, so we'll continue to see a weak market." Elsewhere in Latin America, Mexico's IPC stock index was on-track to close at its lowest level since late March, while Chile's IPSA index gave up part of the previous session's gains. The region's currencies also weakened, with Brazil's real dropping 1 percent against the dollar and Mexico's peso slipping 0.5 percent. "The trend is for a stronger dollar, following markets abroad due to the worries over Ukraine," said Reginaldo Galhardo, a manager at brokerage Treviso in Sao Paulo. Chile's peso weakened about 1 percent against the dollar after government copper commission Cochilco reduced its global outlook for copper prices, the country's main export. Peru's nuevo sol pared some early losses after data showed the economy grew more than expected in February from a year earlier. Key Latin American stock indexes and currencies at 1538 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 998.69 -1.29 0.9 MSCI LatAm 3199.66 -2.72 2.76 Brazil Bovespa 50307 -2.5 -2.33 Mexico IPC 40278.94 -0.62 -5.73 Chile IPSA 3875.7 -0.46 4.77 Chile IGPA 18995.69 -0.37 4.22 Argentina MerVal 6291.97 -1.66 16.71 Colombia IGBC 13867.88 -0.57 6.09 Peru IGRA 14727.35 -0.28 -6.51 Venezuela IBC 2472.45 0.67 -9.65 Currencies daily % YTD % change change Latest Brazil real 2.2341 -0.93 5.49 Mexico peso 13.0986 -0.58 -0.52 Chile peso 554.6 -0.92 -5.14 Colombia peso 1931.99 -0.35 0.00 Peru sol 2.782 0.00 0.40 Argentina peso (interbank) 8.0000 0.03 -18.84 Argentina peso (parallel) 10.26 0.19 -2.53 (Additional reporting by Bruno Federowski; editing by Andrew Hay)
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