EMERGING MARKETS-Latam markets sink on Ukraine, China worries
(Recasts; adds quotes, context on Petrobras; updates prices) 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 emerging market assets. The MSCI Latin American stock index posted its biggest one-day drop in nearly three months, while nearly every currency in the region weakened against the U.S. dollar. Demand for higher-risk investments fell across the board after Ukraine said an "anti-terrorist operation" against pro-Moscow separatists was under way and Russia declared Ukraine on the brink of civil war. The mood 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. China will release its first-quarter growth data on Wednesday at 0200 GMT. 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. Preferred shares of Petroleo Brasileiro SA, known as Petrobras, slid 3.8 percent as Chief Executive Officer Maria das Graças Foster testified to Brazil's Congress on the controversial purchase of a Texas refinery in 2006. Some critics are trying to tie the transaction, which they see as drastically overpriced, to a widening corruption scandal at the state-run oil company. Some analysts, however, see a silver lining for the stock. "Looking into the facts will improve (Petrobras') situation in the future," said Joao Pedro Brugger, an analyst with Leme Investimentos in Florianopolis. "It suffered in recent years with bad management, including the investigations that are happening now. Maybe things could improve from here on out." 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 shift in economic policy following October's presidential election. "We saw the market rising a lot last month mostly on flows, but the fundamentals didn't change," Brugger added. "We are seeing a slight pullback and the China data will be key in determining whether the market will hold here or not." Elsewhere in Latin America, Mexico's IPC stock index pared early losses, while Chile's IPSA index gave up most of the previous session's gains. The region's currencies also weakened, with Brazil's real dropping about 1 percent against the dollar and Mexico's peso slipping 0.6 percent. "At the very least the market remains nervous going into tonight's (China) GDP print," wrote Dirk Willer, managing director for emerging markets strategy at Citi in New York. Chile's peso weakened about 1.1 percent against the dollar after government copper commission Cochilco reduced its global outlook for copper prices, the country's main export. Key Latin American stock indexes and currencies at 2021 GMT: Stock indexes Latest Daily pct YTD pct change change MSCI Emerging Markets 999.32 -1.23 0.9 MSCI LatAm 3,209.63 -2.42 2.76 Brazil Bovespa 50,454.35 -2.21 -2.04 Mexico IPC 40,481.8 -0.12 -5.25 Chile IPSA 3,877.49 -0.41 4.82 Chile IGPA 19,010.29 -0.3 4.30 Argentina MerVal 6,327.27 -1.11 17.37 Colombia IGBC 13,808.32 -1 5.64 Peru IGRA 14,619.67 -1.01 -7.20 Venezuela IBC 2,472.45 0.67 -9.65 Currencies Latest Daily pct YTD pct change change Brazil real 2.2335 -1.04 5.52 Mexico peso 13.105 -0.63 -0.57 Chile peso 555.8 -1.13 -5.34 Colombia peso 1,934.63 -0.49 -0.14 Peru sol 2.782 0.00 0.40 Argentina peso 8.0000 0.03 -18.84 (interbank) Argentina peso 10.37 -0.87 -3.57 (parallel) (Additional reporting by Bruno Federowski; editing by G Crosse and; Andrew Hay)
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