EMERGING MARKETS-Argentine stocks tumble after U.S. court decision
SAO PAULO, June 16 (Reuters) - Argentine stocks plunged on Monday after the U.S. Supreme Court declined to hear the country's appeal to avoid paying $1.33 billion to hedge fund creditors, sparking fears of a default. Other Latin American stocks also declined, with the MSCI Latin American stock index slipping for the third straight session as concern over escalating global geopolitical tensions sapped appetite for riskier investments. The U.S. Supreme Court on Monday left intact lower court rulings that ordered Argentina to pay holdout creditors, which the country had warned could lead to a default on its sovereign debt. Argentina's Merval stock index dropped over 5 percent in early trading, on track for its biggest one-day loss in nearly seven months. "This ruling is the last thing that the government needs given that the economy appears to have slipped into recession in the first quarter," wrote Capital Economics' David Rees on Monday. "Whatever the government intends to do, it needs to make up its mind quickly with a coupon payment due on 30th June." Brazilian, Mexican and Chilean stocks all fell slightly, tracking global markets lower as violence escalated in Iraq and Ukraine. "Between the World Cup, the approaching summer, rising geopolitical risk, and a generally weaker tone for risky assets in global markets, the recovery in emerging market assets may be placed on hold near-term," Brown Brothers Harriman analysts wrote in a client note on Monday. Currencies tracked lower across the region, with traders keeping a watchful eye on the outlook for global interest rates ahead of the U.S. Federal Reserve's next monetary policy announcement, scheduled for Wednesday. "The Fed probably won't raise interest rates but it should note an improvement in the economy and that can cause market stress," said Celso Siqueira, head of currency trading at brokerage firm Advanced in Sao Paulo. Colombia's peso traded slightly lower a day after President Juan Manuel Santos won re-election. "By re-electing President Santos, Colombia voted for the continuation of peace negotiations between the government and the FARC," BNP Paribas' Nader Nazmi wrote on Monday, adding that a peace agreement "could potentially lift Colombia's long-term GDP growth rate." Key Latin American stock indexes and currencies at 1531 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1045,54 -0,34 4,63 MSCI LatAm 3380,33 -0,42 6,06 Brazil Bovespa 54664,61 -0,26 6,13 Mexico IPC 42334,85 -0,35 -0,92 Chile IPSA 3851,95 -0,29 4,13 Chile IGPA 18842,76 -0,23 3,38 Argentina MerVal 7558,05 -6,08 40,20 Colombia IGBC 14328,57 0,48 9,62 Peru IGRA 16251,11 0,25 3,16 Venezuela IBC 2163,19 -0,09 -20,95 Currencies daily % YTD % change change Latest Brazil real 2,2345 -0,22 5,47 Mexico peso 13,0341 -0,15 -0,03 Chile peso 557 -0,07 -5,55 Colombia peso 1886,59 -0,26 2,41 Peru sol 2,793 -0,21 0,00 Argentina peso (interbank) 8,1325 -0,03 -20,17 Argentina peso (parallel) 11,9 -1,51 -15,97 (Reporting by Asher Levine and Bruno Federowski Editing by W Simon)
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